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PKINCIPLES 



OP THE 



Economic Philosophy 



OF 



SOCIETY, GOVERNMENT AND INDUSTRY 



/ 



VAN BUREN DENSLOW, LL.D 



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:0 1888 7) 



CASSELL & COMPANY, Limited 
104 <fe 106 Fourth Avenue, New York 



COPYKIGHT, 

1888, 
By O. M. DUNHAM. 



All rights reserved. 






Press W. L Mershon & Co., 
Rahway, N. J. 



OP PITTSBURG, PA. 



CONTENTS. 



(Figures preceding sub-titles refer to sections of volume.) 

PAGE 

PREFACE xi 

PERSONAL INDEX xix 

CHAPTER I.— Scope and Method 1 

1. Definitions. — 3. Is Political Economy a Science. — 3. Politi- 
cal Economy^lsoan Art. — 4. The Deductive, a priori, or 
Metaphysical Method. — 5. Decline of the Metaphysical 
and Rise of the Historical Method. — 6 Carey's Corrective 
Influence. — 7. The Historical Method is Not a History 
of Opinion Merely.— 8. Limitations on the Historical 
Method. — 9. Relation of Economics to Ethics. — 10. The 
Scientific Method. — 11. — The Philosophy of Statistics. — 

13. The Result of Statistics.— 13. Utility of Statistics.— 

14. Regularity of Phenomena Shown by Statistics. — 15. 
Statistics Taken with a Bias. — 16. The American Impulse 
toward Economic Progress. — 17. The United States as an 
Economic Instructor. 

CHAPTER IL— Wealth 41 

18. Wealth and Poverty — Social. — 19. Savage Life — Social 
Poverty. — 30. Ownership by the Tribe — Barbarism. — 31. 
Tribal Ownership Depends on Occupancy and Use. — 33. 
Tribal Precedes State Ownership. — 23. Charitable and 
Religious Communism. — 34. Relative Inducement to 
Effort under Both Systems. — 35. Wealth Dependent on 
Exchange — How Far. — 26. Private or Individual (Includ- 
ing Corporate) Wealth. — 37. The Commonwealth. — 38. 
The Family and Its Wealth. — 39. Social and Spiritual 
Wealth.— 80. The Wealth of Nations.— 31. The Evanes- 
cence of Wealth. — 33. Can Poverty be Abolished ? 

CHAPTER III.— Values and Prices 79 

33. What is Value ?— 34. Fallacy of Resting Value on Labor. 
—35. Whence Comes Value ?— The Consumer.— 36. The 
Consumer's Place in Industrv. — 37. Karl Marx's Theory 
of Value.— 38. Why Men Exchange.— 39. The Theory of 
Value. — 40. Markets are the Index of Values. — 41. Free- 
dom in Establishing Prices. — 42. Cornering the Market. — 
43. How Prices are Made. — 44. Errors Concerning Causes 
of Prices. — 45. Tooke on Prices. — 46. Prices Rise in Dis- 
proportion to Scarcity. — 47. Permanent and Temporary 
Cheapness. — 48. Relation of Prices to Freedom. — 49. 
Countries of Low and High Prices. 



VI CONTENTS. 

CHAPTER IV.— Title and Use 125 

50. Title and Labor. — 51. Title Dates from Seizure or Appro- 
priation. — 52. Private Title is Monopoly. — 53. The State 
- as a Form of Monopoly. — 54. Title the Source of Ex- 
change, and of Division of Labor. — 55. Titles Becoming 
Private. — 56. The American Land System. — 57. Effect of 
Free Land on Immigration.- — 58. Wasting the Land. — 59. 
American Railway System in Its Unproductive Infancy. — • 
60. The Era of Consolidation. — 61. Great Land Grants to 
Railways. — 62. Socialistic Reaction Against Railways. — 63. 
Objections to Socialistic Theories Concerning Railways. 

CHAPTER v.— Profit and Loss 163 

64. The Beginnings of Industry. — 65. Capital and Labor 
to be Partners. — 66. Organization of Labor by Force. — 67. 
Adam Smith on Wages. — 68. Equivalence of Exchange in 
the Wages Contract. — 69. Instances of Equality of Divi- 
sion. — 70. Productive Industry is a Form of Social Gov- 
ernment. — 71. Do the Indispensable Means of Labor Earn 
a Share of the Product ? — 72. Does the Risk of Loss Give 
Valid Title to the Profit ? — 73. Loss as well as Profit an 
Economic Force. — 74. The Rate of Profit. 

CHAPTER VI.— Capital 196 

75. Definitions. — 76. Distribution of Wealth Precedes and 
Causes Production. — 77. Is Economic Distribution Just ? 
— 78. Dispersion of Capital is a Mode of Destroying It. — 
79. How Distribution of Wealth Attends its Accumulation 
and Getting Rich is Doing Good. — 80. The Greater the 
Accumulation of Reproductive Wealth, the More Equal 
the Diffusion of Enjoyable Wealth. — 81. Capital as a 
Laborer.— 82. Forms of Capital. — 83. Capital as an Eman- 
cipator. — 84. Re-distribution of Ill-used Wealth. — 85. 
Distribution by Luxury. — 86. Its Humanity Arraigned. — 
87. Society's Gain by Economy. — 88. Society's Gain by 
Large Accumulations. — 89. Large Capitals Lessen Con- 
sumption. — 90. Effects of Large Capitals on Rates of 
Wages. — 91. Constancy of Returns. — 92. What Makes 
High Profits'?— 93. Malthus' So called Law.— 94. Fewer 
Producers — Less Production. — 95. Wages are Also Capital. 

CHAPTER VII.— Land 237 

96. Values of Land.— 97. True Cause of Rent.— 98. Rent and 
Transportation. — 99. Rent as a Balance to Transportation. 
— 100. Rent as a Dispersive Force on Population. — 101. -" 
Exhaustion of Soils. — 102. Values of Laud Due to the 
Consumers of Land Products. — 103. Machinery in Farm- 
ing. — 104. Effects of ReleasingLabor by Machinery. — 105. 
Tenant Farms and Large Holdings in America. — 106. 
Large and Small Land Holdings in England. — 107. Land 
in Ireland. — 108. Evolution of Cultivated Plants as Sources 
of Food. 



CONTENTS. vii 

CHAPTER VIII.— Labor 281 

109. Deliuitiou of Laboi-. — 110. Work Differs from Labor. — 
111. All Labor Can Not be Agreeable. — 113. Labor Less 
Broad than Production.— 113. The "Wage Fund"*. 
Doctrine. — 114. The Rate of Wages and Margin of Profits. 
— 115. Is Population a Check on Wages? '—116. Countries 
of High and Low Wages.— 117. Labor-Saving Machines. 
— 118. Labor Combinations. — 119. Arbitration and Labor 
Courts. — 120. Labor Agitations for a Social Revolution. — 
121. Causes which Compel Men to Work for Wages— 122. 
The Organization of Labor in Industry. — 123. The Terms 
of Partnership, Labor, and Capital.— 124. Effect of Impor- 
tation of Competing Products on the Wages of Labor. — 
125. Effect of Military Protection to Foreign Trade on 
Home Wages. — 126. Diversity of Industries Essential to 
High Wages. — 127. Exclusion of Immigration as a Measure ' 
to Promote Wages. — 128. The Barter of Domestic Labor 
for Domestic Labor Promotes Domestic Wages. — 129. 
Wages of Social Labor. — 130. Wages of Women. 

CHAPTER IX.— Money 329 

131. What is Money?— 132. Originof Money.— 133. The Form 
of Money. — 134. The Substance of Coins. — 135. Changes 
in British Coinage.— 136. The Standard.— 137. The Ratio 
between the Money Metals. — 138. Exchangeable Credit as 
Quasi Money. — 139. Bills of Exchange and Notes. — 140. 
Money of Account. — 141. Bank Deposits and Checks. — 
142. Bank Notes. — 143. Government Notes and Debts. — 
144. The Volume of Credit.— 145. Relative Cost and 
Economy of Coin and Credit — Fiat Money. — 146. Variations 
in the Volume of Money. — 147. The Single and Double 
Standard. — 148. Rate of Production of Gold and Silver. 

CHAPTER X.— Crises 370 

149. Crises Defined. — 150. Crises Produced by Excessive Im- 
portation of Competing Products. — 151. "Competing Ira- 
ports Again the Cause. — 152. Exhaustion of Capital. — 153. 
Great Wars Seldom, if Ever, Produce, but Often Avert or 
Remedy Crises. — 154. The American Crisis of 1837. — 155. 
Crisis of 1857.— 156. The Crisis of 1866.-157. The Crisis 
of 1873-9.-158. The Balance of Trade.— 159. Doctrine 
of the Balance of Trade. — 160. Are Crises Useful or Penal? 

CHAPTER XL— The State 398 

161. Government Is Natxu-al. — 162. Interest Organizes Indus- 
try. — 163. The Motive Force in Industry. — 164. Forms of 
Government Dependent on the Evolution of Occupations. 
— 165. Governments Classified. — 166. Parliamentary and 
Representative States, — 167. Diversity of Form in Repub- 
lics. — 168. Diversity of Functions and Qbjects. — 169. 
Local Govern ment. — 170. The State as Related to 
Indu.stry. — 171. Coercion and Attraction in the State. — 
172. Government by Force.— Voting by Males. — 173. 
Armies and Their Cost. — 174. Crime and Its Punishment. 
— 175. Social Crimes and lusauilies. — 176. The Recent 
Growth of Debt. 



viii CONTENTS. 

CHAPTER XII.— Taxation 452 

177. Origin of Taxes.— 178. Stondards of Equal Taxation.- 
179. An Ideal Theory of Taxation.— 180. The Search for 
the Incidence of Taxation, and of Specific Taxes. — 181. 
The Practice of Modern Governments in Taxation. — The 
United States. — 182. Taxation in Great Britain. — Local. — 
183. General Taxation in Great Britain. — 184. India. — 
Taxation by Profits of Enforced Foreign Trade. — 185. 
Taxation by Profits of Enforced Trade.— Turlsey.— 186. 
Taxation by Profits of Enforced Trade. — Ireland. 

CHAPTER XIII.— Taxation Continued 496 

187. France. — Conditions. — 188. France. — Revenues. — 189. 
France, as Discussed by Smith. — 190. Taxation as a Cause 
of Production. — Beet Sugar. — 191. The Sophisms of 
Bastiat. — 192. Hodern Germany. — Protective Taxation a 
Source of National Unity. — 193. Germany's Present System 
of Taxation. — 194. Revenue System of Russia. — 195. 
English Colonies. — 196. China and Japan. 



CHAPTER XIV.— The Free Trade Criticism 555 

197. Methods of Argument Concerning Protection and So- 
called Free Trade. — 198. Sidgwick on Protection to Native 
Industiy. — 199. Moffat on Protection in Growing Coun- • 
tries. —200. Devas on Protection. — 301. Prof. Perry's 
Free-Trade Methods. — Does or Does Not Free Trade 
Employ Foreign Labor? — 202. Why Canadians May Not 
Have Free Trade with Vermont. — 203. The Profit Argu- 
ment. — Protection Profits a Nation or Nations Would 
Not Protect. — 204. Cost of Labor in America and Europe. 
— 205. Making Taxes Productive. — 206. Collecting Taxes 
from Foreign Producers. — 207. Whether the Duty Raises 
the Price on the Whole Domestic Product. — 208. Getting 
Cutlery by Making Buttons. — 209. Must a Nation Import 
Commodities in order to Export Them, or Buy Them in 
order to Sell Them?— 210. The Theory of Barter Does 
Not Aid the Free-Trade Criticism. — 211. Private, Special, 
and Public Interests.— 212. Protection Universal. 



CHAPTER XV.— Economy op Protection 609 

213. How a Tariff May Protect Producers.— 214. When Duties 
on Imports Protect from Taxation.— 215. When Protection 
Promotes Production. — 216. Protection Promotes Wages. 
—217. Protection Promotes National Unity and Peace. 



CONTENTS. IX 

CHAPTER XVI. — State Action in Relation to Special 

Industries , 631 

218. Silk. — 219. Decline of Silk Manufacture in England. — 
230. Evolution of Glass Manufacture. — 221. Evolution of 
Iron and Steel Manufacture. — 222. Rivalry between Great 
Britain and America. — 223. American Ship-Building, 
Coasting and Ocean Vessels and Carrying Trade. — 224. 
Evolution of Manufactures in Canada. — 225. The Sheep 
and Wool.— 226. Wool a Finished Product.— 227. Rate of 
Consumption of Wool. — 228. The Protection of Wool and 
Woolens in Europe. — 229. Wool Culture in America. — 
230. Woolen Industry of England.— 231. The Cost of 
Protection to the Woolen Manufacture. — 232. Cotton, 
Antiquity and Modern Growth of the Industry.— 233. The 
Cotton-Gh-owing Industry of the United States. — 234. 
Cotton as a Power in Politics. — 235. The Cotton Famine 
of 1860-5. — 236. Destruction of Quinine Manufacture in 
the United States.— 237. The Salt Industry as Related to 
the Tariff.— 238. Leather, Boots and Shoes.— 239. Indus- 
tries Must be Unprofitable as well as Desirable to Merit 
State Action. — 240. Private and Public Purposes. — 241. 
Post Hoc, Ergo Propter Hoc. 

GEKERAL INDEX 709 



PREFACE. 



Students of Political Economy are more often the old than the 
young; and more largely those who have already given much 
time and thought to its mastery, than those to whom the effort is 
new. I am satisfied that what both classes desire is an extended 
but convenient repository of accessible facts, avoiding dogma and 
abstraction, but allowing human experience and history to con- 
vey their own lesson. In the work of teaching Political Econo- 
my to young men, I found their perceptions generally keener 
than their text-books were adapted to satisfy. Still more, in. 
responding to the innumerable inquiries made of an economic 
daily joui-nalist, I have discovered that the people could not find 
in the books of current discussion of economic theories any 
answers whatever to the practical questions on which they sought 
light. Or if the questions were answered it was easy to perceive 
that the answer in many cases was false, partial, or obscure. 
Instead of the book being above the student or the inquiring 
public, it was either below, or irrelevant to both. I have there- 
fore assumed in prepai'ing this book that society contains no fact 
or feature which its reader will not fully comprehend if the 
story be told clearly and simply. I have tried to do only this. I 
trust my work may prove acceptable to the students of Political 
Economy in this and other lands, in the degree in which it fairly 
reflects the opinions of statesmen, the wisdom of nations, the 
views of practical men and men of affairs — for these get nearest 
to the truth of things. 

The fundamental view of economics which may be said to 
inspire and give structure to the book, is that to be true or useful 
economic science must be no longer destructive but construc- 
tive. It must study to explain how things actually are, before 
plunging into the question whether they are as they ought to be. 
In doing this it must make appreciative exposition precede criti- 
cism. The history of the battle must first be given before the 
generals who led in it are court-martialled and shot. Political 
Economy has thus far been conducted in a way that makes it a 



xii PREFACE. 

body of fault-finding and carping, by men innocent of any con- 
nection with government and but slightly acquainte'd with busi- 
ness, as to the effect of that legislation whose responsibilities 
they have never borne, upon that industiy toward which they 
maintain a parasitic rather than a controlling relation. 

However political economists may seek to dodge it by their 
definitions, Political Economy is a criticism upon statesmanship, 
so long as it continues to be any thing. They may say it is a 
" science of sales " only, and that there is nothing of a political 
nature about it ; that it has been wrongly named ; that it should 
be called Catallactics, or Plutology, or the like. But to this the 
statesmen may reply : "Why, then, do you bore us with it? We 
have no time to do more than acquaint ourselves with those 
sciences and arts which have a bearing upon government- 
You say yours has not. If your science is that of selling and 
exchanging, go on with your didactical exposition of swapping 
and trading. It has no more to do with us than a treatise on 
weaving or spinning. " 

In fact the men who define Political Economy as a "science 
of sales " mean thereby that it is a science which teaches that the 
right of individuals to make sales is superior to the right of 
government to afPect in any manner by legislation the nature or 
quality of the sales they shall make. They show this palpably 
by filling their volumes and speeches with complaints that gov- 
ernment is interfering with sales. Not a line of Perry, Mill, or 
Sumner is free from this complaint. Hence their definition of 
Political Economy is annulled by the quality of the thing they 
put forth as being Political Economy. That is a critique on the 
relation of government to sales. If it were scientific in its quality, 
it would not be a science of sales, but a science of the relations 
which government sustains to sales. This restores the name 
"Political " to their " Economy." This restoration they can not 
escape except by letting government entirely alone. When the 
teachers of the " sales " school begin by saying " it is none of our 
business as economists whether the governmeut interferes with 
trade or industry or not ; our sole duty is to teach the principles, 
on which trade and industry will proceed after government shall 
have adopted such interferences as it thinks proper, and the 
methods by which the industrial mass will adapt itself to the ac- 
tion of the government"; then, and not till then, will they have 
the right to reduce the terms of theii- definition to those of a sci- 
ence of sales only, with which government has nothing to do. 



PREFACE. xiii 

The true logic of Laissez Faire will only be reached when that 
Political Economy, which consists in teaching that government 
and sales have nothing to do with each other, shall manifest at 
least its sincerity, by conceding in advance that the expounders of 
sales have no opinion whatever concerning the functions of 
government. But. so long as, under pretence of teaching a science 
of sales only, they in fact purport to convert their teaching into a 
complaint against all action of government that, interferes with 
sales, lessening them in one direction and promoting them in 
anotlier, they ai'e bound to begin by an exposition of government 
itself; for perad venture the right of the individual to sell may by 
jiossibility be subordinate, as a fact in social science, to the right 
of governments to regulate sales. It may even appear that much 
of the economic value of the individual's right to sell may depend 
on the fidelity with which government sliall govern his sales. 

But supposing the contrary to be true, the sales school can not 
teach it to be so without teaching the functions of government, 
and the instant they do this they cease to be a " sales" school. 
Political Economy passes from a science of sales into a science of 
the relation between government and sales. 

Apprehending that Political Economy must needs teach the 
functions of government concerning industry it next follows that 
the economist must no longer be a member of a mere sect of anti- 
government critics. Political Economy can not attain its true 
dignity, as a scientific expositor of the relations of government 
to industry, so long as the statesmen of the world monopolize the 
ability to see things as they are, and to do things in a way that is 
practicable, while the economists indulge in the mere imagina- 
tive occupatiofii of theorizing in the subjunctive mood as to how 
they might, could, would, or should be. It is time that the econo- 
mists of every country had ceased to be a sect antagonizing the 
statesmen ; especially is it time that the economists of America, 
France, and Germaay had ceased, in antagonizing the statesmen 
of their own country, to fall into a species of disloyal alliance 
with the statesmen of countries whose economic interests may 
not be in harmony, in certain important and vital respects, with 
their own. 

A second fundamental idea of this book is tliat nations are col- 
lective persons, having each its individuality and its career to 
pursue, in a certain logical continuity with those antecedents 
which have brought it where it is, and hence that any given 
economic expedient, to be understood, must be studied in the 



XIV PREFACE. 

light of the antecedent career of the nation adopting it. An im- 
port duty of $1.25 per pound, or say 1200 percent., on cigars, or an 
enactment prohibiting the domestic cultivation of tobacco — both 
of which exist in England, and are deemed wise, by wise men — 
would not even address themselves to the discretion of an 
American for calm consideration. The duty would here be too 
preposterous to be pi'oposed, and the enactment could not be 
passed at all by virtue of any power with which our national 
government is clothed by the written constitution. It is as im- 
possible of adoption in America as Herod's decree for the slaugh- 
ter of the Innocents would be of imitation by one of our Collectors 
of Internal Revenue. Hence to assume that in a college class room 
the enactment of a duty of 5s. sterling on cigars, or the prohibition 
of the cultivation of tobacco, can be discussed on the cosmopolitan 
plane, without recognizing nations as distinct integral persons, 
having each its career determined largely by its peculiar antece- 
dents, is to incapacitate ourselves wholly for the intelligent ap- 
prehension of the subject. The revenue legislation of England 
is no better adapted to any such cosmopolitan tests than that of 
any other country. Its tobacco taxes, its exemption of land and 
capital from direct taxation, its policy of aggression among the 
barbarian races in behalf of its manufactures and its export trade, 
are all as impossible in our national economy as its conquest of 
India, its nobility, or its church establishment. Hence, to take a 
simple act of legislation concerning one point, a duty on avooI for 
instance, and discuss it as if were the same thing in one country 
as in another, is not to discuss it at all. Countries must be studied 
like careers, as continuous and consecutive wholes, and to this 
end a little must be known of the organization and structure of 
each before we seek to pass upon its conduct. If it have fins it 
will not climb. If it have claws it may not swim. It will obey 
the inner law of its constitution, be its career long or brief. 

Hence, in this work, the prominence given in the chapter on 
the State to the quality and, so far as might be, the true inward- 
ness of political institutions, is in harmony with the first funda- 
mental view above taken, that Political Economy is an exposi- 
tion of the economic aspects of statesmanship. But a state is a 
mechanism, and no two mechanisms are alike. Each engineer 
masters only his own engine. The others would explode under 
him. I have endeavored to lay bare chiefly and fairly, in discuss- 
ing the workings of the English and American constitutions, 
those features in both which their own most fair-minded states- 



PREFACE. XV 

men, either on tlie one hand admire, or on the other deplore. 
For the people of either country, so long content with using such 
political machinery as they found themselves provided with to 
promote their material interests, may at any moment find a hall in 
their activities, in which to overhaul and seek even to mend their 
political machinery. Ancestor-worship forms but a small part 
of the intellectual equipment of the i^eople of either country if 
they come to believe that they can improve the political mechan- 
ism in its actual workings. It has been deemed fitting, therefore, 
to make clear the unity between the national mechanism, which 
is after all only tlie embodied people, and the same people when 
viewed in their industrial aspects as producers and consumers. 
It is not merely that the Political State and Industrial State are 
companions on the same road, but the Political State is shown to 
be the apparel of which the Industrial Life of the people is the 
wearer. 

To some it may seem that certain policies, pursued by the 
governing powers both in Great Britain and America, are 
treated with an acerbity that throws the book out of tune with 
the statesmanship of both countries. In America, the drifting 
away from the intent of the framers of the Constitution, in respect 
to the mode of selecting the President, and the increasingly auto- 
cratic tendencies of the Presidential oflB.ce, may be deemed to have 
been so treated. In discussing economic features of the British 
Empire, the chief points of criticism are the very unequal degree 
in which the various populations composing it have found it pos- 
sible to secure the friendly regard of Parliament, and the conse- 
quent voluntary abandonment of the farmers to unequal compe- 
tition with those of other countries, after certain classes of the 
manufacturers, through four centuries of protection, had ceased 
to need its further continuance. The judicious reader will dis- 
cover, and the adverse concede, that among the truer and higher 
statesmen of the country whose legislative or administrative ac- 
tion may be tlius criticised, some, of note, have preceded me in 
the utterance substantially of the views here enunciated. 

It is believed that the fullness of the indexes and the simplicity 
of the order and arrangement adopted, combined with its ample 
pi-esentation, in the text, of the facts essential to guide a judgment 
on most economic issues, and in tlie notes, of the views of nearly 
all economists, may make it convenient as a book of reference to 
that very large number of persons who, if amply supplied with 
facts, find it not difficult to arrive at their own conclusions. 



XVI . PBEFACS. 

Political Economy, so far f i-om being a dismal science, is fas- 
cinating in all its parts to all who master in any degree the clues 
to its right apprehension. It is even entertaining in the hands of 
some, every blow of whose fiugei's upon its strings evolves only 
discord and misapprehension. In its fairer spirit and fuller 
apprehension it will become the mediator between all of society's 
extremes of condition, race, and culture — between the poor and 
the rich, the virtuous and the criminal, the wise and the un- 
learned, the governors and the governed, and, among nations, 
between the monarchical and the republican, the debtor and the 
creditor, the Christian and the heathen. It reconciles man to 
himself by acquainting him with himself in others. The 
proper study of society is society. No other study can be so 
broad or so enlightening. I do not with Jevons thinls: it can be 
greatly helped by measuring gains and losses of pleasurable 
emotion against each other with algebraic signs and symbols. 
Nor with Mill can I attach profound value to tenuous specula- 
tions pervaded by metaphysical subtlety. Nor, with Senior, am 
I prepared to dispose of conditions of society, past, present, or 
f utui'e, wherein wealth arises, of kinds that are not exchangeable, 
and in modes that are not due to competition, nor measurable in 
coin values, which it becomes perhaps impossible or even criminal 
to buy or sell, by saying that they are not economic conditions, 
and that the society in which they arise would not be an eco- 
nomic world. It is sufficient for me that they are, have been, 
and may long continue to be, a part of actual society, govern- 
ment, and industry, and that they have economic effects. The 
family, the church, the state, the college, the literary, artistic, 
and social world are full of priceless values that do not arise by 
competition, but exclude it ; society is in part organized and 
held in place by means of these unpurchasable values which it is 
proud to know are not exchangeable. They create cooperation. 
They inspire trust. They promote united action. Honor, Law, 
Patriotism, Fidelity are as much parts of the existing social 
wealth of the world as profits, money, and exchange. Hence, to 
limit economic discussion to the consideration of things that can 
be bought and sold may be to emasculate, disinspire, and 
destroy it. 

Finally Economic Science is a continuing inspiration. It can 
only be petrified into fixity, after it has lost its living pi'inciple. 
As an in.spiration it leads, but it can not halt. Its future can not 
be dwarfed by recognizing its present state as final. It must 



PREFACE. xvn 

migrate to new fields of instruction as the old lose their interest, 
by the same law by which its chief factors, profits, and wages 
avoid the declining rate of compensation in old investments, by 
themselves passing on to new efforts, new processes, and new 
places. So Political Economy will find its new I'ate of profit and 
higher wage in advancing to new forms of thought, new exposi- 
tions, new fields and themes. Its spirit must keep pace with the 
march of the industries and the governments. In its present stage 
of development it is not unlike the early systems of placer mining 
for gold. The one rule which governed finding it was " where 
you find it, there it is." In judging of its value the placer sys- 
tem further enriches our language with the proper test. It is 
" worth what it pans out." The ore in this book is now ready to 
be submitted to the sieve. The reader will shake the sieve and 
hold the pan. Interested vitriol throwers v^ill stand around and 
express a doubt whether the glistening grains are not pyrites. If 
so, let the acid thrower have free fire at every grain. So many 
as remain will be the fine gold of commerce and of nations. 

Potter Building, New York, May 1, 1888. 



PERSONAL INDEX. 



[Many facts of economic importance stand associated with the names of actors in 
prominent events rather than with those of economic teacliers or critici?. Such is the 
connection of Colbert witli Freiicli manufactures or of Cortez with the increased sup- 
ply of silver. As the puriiose of an index is to give the reader the clews most liiiely 
to enab e liim to find what lie is searching for, ic is believed that such an index wiil 
prove more valuable than the tabulated list of autliors cited, which is also conven- 
iently included in it. It shades outward toward names whose connection with the 
current of economic history is slight or trivial. But an index of authors cited picks 
up in like manner many whose contribution to the course of discussion has been slight. 
The present Index is designed simply to aid the reader in his special search for facts.] 



Abel, 603, 668 

Abraham, 166, 333 

Academy, French (Institute de 
France), 466 

" Academy," London, 490 

Achard and beet sugar, 503 

Achilles, 334 

Adams, Prof. H. C-, on debts, 
353, 448-451; on special in- 
terests, 603, 653, 654 

Agricultural Report, 96, 106, 252 ; 
of Ohio, 254 ; of the United 
States, 256 

Albert, Prince, 215 

Alexander of Macedon, 276, 279, 
331 

Alison, Sir Archibald, 359 

Alton farm, 269 

American Encycloptedia, 255 

American Association for Advance- 
ment of Science, 650 

American Iron and Steel Associa- 
tion, Bulletin of, 555 ; on prices 
of English and American iron 
and steel goods, 590 

American Wool Growers' Associa- 
tion, 669 

Annales de Cliimie, 503 

Anne, coinage, 342 

Aristotle, definition of political 
economy, 2, 405 ; women owned 
land, 61 ; on value, 82 ; on title, 
131 



Archangel Michael, 340 

Arkwright, 189, 681, 684 

Asiatic Museum in St. Peteisburg, 

334 
Atchison, Topeka and Santa Fe 

Railroad Company, 157 
Atkinson, Edward, on profit 

sharing. 179, 180 ; decline of 

profit, 195 ; on washes, 219, 294 ; 

on product, 224, 229 
" Atlantic Monthly," 553 
Ailesbury, Marquis of, — land of, 

270 
Augustus, 668 



Bacon, Lord, on balance of trade, 

393 
Baird, H. C, on price, 117 
Bakewells and Co., glass, 640 
Baltimore and Ohio Railroad 

Co., 153 
Baring, Sir Evelyn, on India, 66 
Bastiat, Frederic, 3 ; definition of 
political economy, 16 ; definition 
of wealth, 42; definition of value, 
80, 82; on declining returns, 229; 
on choice between wages and 
profits, 234; rent, 241, 503; 
" Sophi.sms " of , reviewed, 506- 
514; ' ' Harmonies Economiques," 
507 
Bnttersley's " Repealer's Manual," 
493 



PERSONAL INDEX. 



Bayard, Stephen, 639 
Beaconsfield, Lord, 20 ; on gold 
standard, 363 ; on protection, 
558 577 
Beaufort, Duke of, land of, 270 
Beccaria on value, 82 
Bedford, Duke of, land of, 270 
Beil, G., 22 

Behm and Wagner, atlas, 548 
Bennett, James G., 190 
Bentham, Jeremy, 444 
Bentinck, Lord George, 558 
Benton, Thomas H., 38, 629 
Berneville, 674, 681 
Bible (Numbers) 138, 277, 279 
Bigelow, Mr. E. B., 678 
Bishop, Hist, of American Manu- 
factures, 694 
Bismarck, Prince von, 516, 524, 

577 
Blackstone. Sir "William, on title, 
129, 130 ; on royalty and House 
of Commons, 409, 410, 453 
Blaine, James G., 38,423, 628 
Board of Trade of Montreal, 666 
Board of Trade Returns, 679 
Bancroft on community of goods, 

52 
Banfield, T. E., on cause of value, 

94 
Bank of England, 335, 349, 370, 
371, 372, 374, 375, 389, 390 ; 
Imperial Bank of Germany, 362 ; 
of Austro-Hungary, 363 
Banks of St. Petersburg, France, 
Germany, Austria, Netherlands, 
and of the United States, 351, 
352 ; of Massachusetts, New 
York, Rhode Island, and lovpa, 
352 
Bourne, on food supply, 65 
Bourse, Paris, or stock market, 

108 
Bowen, Prof. Francis, 16 
Bowes, J. L. and Bros., 678 
Bradstreets, reports of, 106 
Brassey, Sir Thomas, on exports, 
35 ; on Indian wages, 227 ; on 
labor and wage fund, 291 
" Breitman, Hans," 20 
Bremen Line of steamers, 657 
Brewster and Co., 313, 314 
Bright, John , on protection and de- 
mands of labor, 608 
British Board of Trade Returns, 
679 



British Parliaments, select com- 
mittee on scientific instruction, 
596 

Broderick, on price, 117, 118, 251, 

Brougham, Mr. Henry (Lord), 642, 
643 

Brownlow, Earl of, 270 

Brugsch, Dr., 334. 453 

Buckle, 10 

Bulletin of National Association of 
Wool Manufacturers, 678 

Bureau of Labor, 314 

Burke, Edmund, 227 

Burlingame, Anson, 535, 548, 549 

Butler (" Hudibras "), 441 

Byles, Judge, 558 

C. 

Caesar, Augustus, 454, 466 

CaBsar, Julius, 454 

Cain, 603, 645, 668 

Caird, Sir James, on corn in 
England, 120 

Cairnes, J. E., definition of value, 
80; share of capital, 180 ; on labor, 
290, 291 ; on wage fund, 292, 
294 ; on protection, 556 

Calhoun, John C. , 38 ; on repre- 
sentation of capital and numbers, 
413, 415, 629 

Cambridge University, 620 

Camden & Amboy Railroad and 
Transportation Co., 154 

Campbell, Chancellor, on land 
tenure, 52 

Canadian Manufacturer, 581 

Carey, Henry C, 3 ; definition of 
political economy, 5 id.; correc- 
tive influence, 11, 16 ; definition 
of wealth, 42 ; criticised, 43-45 ; 
relation of wealth to civilization, 
48 ; on value of land of Great 
Britain, 71 ; definition of value, 
79, 80, 83. 91 ; on perishability 
of labor time, 92 ; on price, 96, 
117 ; on population in United 
States, 145, 180 ; on decline of 
profits, 194, 195, 229 ; on security 
as cause of rent, 234, 245 ; on rent 
and fertility, 239, 247 ; on labor, 
289 ; money, 330 ; on crises, 374, 
383 ; cotton product, 397 ; on land 
values in India, 488 ; Carey vs. 
Bastiat, 507 ; on Prussia, 519 ; 
on soils, 570, 577, 674, 687, 705 



PERSONAL INDEX. 



Carey, Matthew, 514 
Carlisle, Earl of, 270 
Carroll, Charles, of CarroUtou, on 

railways, 152 
Carroll, P. C, 555 
Cartwright, 681, 685 
Cass, Lewis, 38 
Cass farm, 269 
Candor, Earl of, 270 
Catholic Church, 53 . 
Cavour, Count, 630 
Central Pacitic Railroad Co., 157 
Census of 1860 in United States, 

254 ; of England, 272 ; of United 

States, 312, 313 
Cernuschi, 373 
Chalmers, Thomas, 330 
Charles I., 341 ; execution of, 42 ; 

effects, 407 
Charles II., 340, 342 
Charles V- , 669 

Chase, Salmon P., 38, 221, 386 
Chalmers, Mr., on local taxation 

and government, 477, 478 ; on 

price, 96 
Chambers' Encyclopoedia, 481 ; on 

shoddy, 567, 672 
Chang Kien, Emperor of China, 

276 
Chase, Secretary S. P., 114 
Chen Ming, Emperor of China, 

276 
Cheney farm, 269 
Cherbuliez, on value, 80 
Cheeseman, Oscar, importer, on 

prices, 621 
Chevalier, M., 503, 510 
Chicago Board of Trade, 106, 108 
" Chicago Tribune," the, on Cana- 
dian share in paying American 

duties, 593 
Choate, Rufus, 38 
Chow-King, 668 
Chow-tin-jin, 538 
Chrysostom, on community of 

goods, 52 
Clare, Lord, on Ireland, 492 
Clark, of Greenbush, 632 
Clark, jr., & Co., John, foreign 

manufacturers, 604 
Clay, Henry, 38 ; compromise of 

1832-3, 384, 577, 629, 652 
Clemens, on community of goods, 

52. 
Cleveland, Duke of, 270 
Cleveland, Grover, 423 



Clinton, DeWitt, 38 ; on canals, 
150, 151 

(Uive, Robert, Lord, 227 

(Johdcn Club, essay on land tenure, 
52 ; motto, 628 

Cobdcn, Richard, 155 ; on Chinese 
tariff, 533 ; on Chinese war, 
536 ; on free-trade class interest, 
604 ; on wages, 604 ; his treaty 
with France, 636, 657 

Codman, Captain, 662 

Colbert, 501, 510, 577 ; on glass, 
639, 673, 674 

Colburn, Chancellor of Exchequer, 
657 

Colley, Col. Prof., 430 

Collins, E. K., 657 

Collins Line, 657 

Colwell, Stephen, 16 

Colton, Calvin, definition of politi- 
cal economy, 3 

" Commercial Bulletin " of Boston, 
600 

Commission of Parliament on 
decline of silk manufacture, 636, 
637 

Committee on Contract Packets, 
657 

Commons, report of Select Com- 
mittee on Instruction to House 
of, 596 

Comte, August, classification of 
sciences, 6 

Columbus, Christopher, 24, 189 

Committee on Manufactures, re- 
port of, 605 

Condillac, 82 

Confucius, 550 

Congress, Committee on Manufac- 
tures, 605 

Congreve & Son, steel importing 
agents, 604 

Constantine, 455 

Constitution of United States, on 
monev, 330 ; election of Presi- 
dent, "416, 426, 428; on export 
duties, 460 

Consular reports, 499, 523, 525 

" Contemporary Review," 66 

Cooke, Jay, 157, 391 

Cooper, Peter, 190 

Copernicus, 323 

Cordicr, on cost of wars, 70 

Corn Exchange of Montreal. 665 

Cortcz in Mexico, 50, 331, 631 

Cotton Circular (Liverpool), 664 



PERSONAL INDEX. 



Cournot, on market, 100 
Cossa, Luigi, 24 
Craig, Isaac, 639 
Cranston, Eliza, 425 
Crompton, 681 , 

Cromwell, Oliver, 340, 426 
Cunard, 657, 658, 663 
Cuuard Company, 662. 
Cyclopedia of Political Economy, 
American, 330 



Dalrymple, farm of, 270 

Darien Canal Co., 371 

Darwin, Charles, 487 

Davenant, Dr., on price, 95, 115 

Davenport & Bro., importers, on 
prices, 621 

Davis, John Francis, 539 

De CandoUe, origins of plants, 275- 
280 

De Fontenay — on rent, 242 

De Guignes, 538 

De La Fayette, 514 

Delaware and Raritan Canal Co. , 
154 

Delano, C, 669 

Democratic federation in England, 
272 

De Parien, 453 

Department of Agriculture, United 
States, 252, 256 

Derby, Earl of, land, 270; on 
national debts, 448 

De Tocqueville — on American 
opinion, 425 

Descartes, 571 

Devas, C. S., on condition of politi- 
cal economy, 9 ; on Mercantile 
School, 19 ; on labor, 282, 330, 
331 ; on protection, 556 ; on 
navigation laws, 557 ; on pro- 
tection, 568, 569, 570, 574 

Devonshire, Earl of, land, 270 

"Deux Mondes, La Revue des," 528 

Digby, William, on famines in 
India, 485 

Dillon, Mr., 9 

Diomede, 334 

Diodorus, 50 

Dio Cassius, 50 

Dixon, W. riepworth, on Russia, 
536 

Dodge, J. R., 256, 202, 265 

Dominion Board of Trade, 605 



Dorsey, E. B., 29; on railway 

earnings, 174 
Douglas, S. A., 38 
Downs, F. C, on famines in India, 

485 
Duhring, Dr., 16 
Dupin, on cost of wars, 70 
Dutcher, Josiah, plow, 264 
Dutcher, W. & G. , manufacturers, 

Sheffield, Eng., 605 

E. 

East India Company, 490, 670 

Eckhardt, J., 528 

Edison, T. A., 189 

Edward III., 340, 669 

Edward IV., 340, 341 

Edward VI., 340, 341 

Eichbaum — glass-cutter, 641 

Elder, Dr. William, deiinition of 
political economy, 3 

Elder, Cyrus, on labor, 284, 286, 
323, 324 

Elgin, Lord, 534, 553 

Elizabeth, statutes concerning 
labor, 303 

Elliott, Captain, 534 

♦Encyclopaedia Britannica — on corn 
laws, 119 ; on distribution of 
land, 138, 139 ; corn law repeal, 
376 ; cost of armies, 438 ; on 
Chinese and opium war, 534 

Encyclopaedia, Chambers', 481 ; 
on shoddy, 567 

Engineers, Brotherhood of Loco- 
motive, 510 

England, Bank of, 336 

England, census of, 273 

Erie Railway Co., 156 

Esau, 308 

Etheridge, Emerson, 38 



Fancher, H., 482 

Farley on Turkey, 489, 490 

Fawcett, Henry, definition of 
political economy, 3 ; id., 5 ; a 
fallacy, 26 ; definition of wealth, 
42 ; criticised, 45 ; absence 
of wealth in savage nations, 
48; rent, 248; id., 345; local 
taxes in England, 477 ; on pro- 
tection, 556 

Fawcett, W. L., on debt and prices, 
393, 450 



PEliSONAL INDEX. 



Faj^etle, De La, 514 

" Federalist," The, 409, 418 

Ferrara, 16 

Field, Cyrus W., 189 

Field, Marshall, on prices, 623 

Fonteuay, M. de — ou position (lo- 
cation) and rent, 242 

Fourier, 75 ; law of varietj^ 94 

Fox, C. J., 408 

Franklin, Benjamin, 24, 78, 632, 
647 

Frederick the Great and beet sugar, 
503 

Freeman, Prof. E. A., 408 ; on 
Turkish people, 489 

Free Trade League, 604 ; run by 
importers, 604, 662 

French and Hawkins (harvester), 
264 

France, Academy of, 466 

Fulton, Robert, 24 

G. 

Gallatin, Secretary, 38, 640 

Gambetta, M., 503 

Gardner, Mr., M.P., on Irish du- 
ties, 492 

Garfield, President, 38 ; vote for, 
423 ; ou protection, 599 

Garibaldi, Giuseppe, 630 

General Court of Mass., on glass 
manufacture, 639 

Genovesi on value, 82 

George, Henry, definition of polit- 
ical economy, 3 ; of wealth, 43 ; 
his land doctrine, 125-130 ; on 
title, 186 ; on poverty in cities, 
219 ; confiscation scheme, 243, 
268. 

George 11. , King — writ of execu- 
tion for debt, 144 ; statutes con- 
cerning labor, 303 

George IH., King — influence of 
on constitution of England, 133 ; 
statutes concerning labor, 303 ; 
coinage under, 341, 342; view 
of prerogative, 408 ; tax, 466 

Girard, Stephen, 202 

Gibbon, 454, 550 

Giffin, 272, 273, 392 

Gladstone, W. E., 36, 484; on Ire- 
land, 492, 493, 643 

Glaucus, 334 

Gleim, Dr., farm of, 270 

Godard, 189 



Godin, M., 313 

" Golden Fleece," the, 669 

Goldziher, 645, 668 

Goodyear, 189, 325 

Goschen, Rt. Hon. Geo. J., 392, 
459, 467 ; on local taxation, 477, 
478 

Gossen, Hermann H., his theory 
of value, 94 

Gott, Mr., 681 

Gough, Sir Hugh, 534 

Great Britain, census of, 272 ; cus- 
toms and excise, 482 

Grand Trunk Railway Co., 156 

Grandin, farm of, 270 

Grant, Gen. U. S., 373 

Grant, Sir Hope, 534 

Great Western Railway Co. of Can- 
ada, 156 

Great "Western Steamship Co., 657. 

Greeley, Horace, 6, 373, 464, 503 ; 
on beet sugar, 504—506 ; on re- 
sumption, 529 

Gresham, Sir Thomas, his law as 
to adulterate coinage export, 
368 

Griinlund — on abstinence, 74 ; di- 
vision of earnings, 176, on slav- 
ery and progress, 212 ; on "fleec- 
ings," 303, 304, 308 

Guizot, on representative govern- 
ment, 408, 409 ; on Roman trib- 
utes, 454, 503 

H. 

Hallett, Major, experiments in thin 
planting, 231 

Hale, Senator, 38 

Hallam, on House of Commons, 409 

Hamilton, Alexander, 38 ; on cause 
of rent, 241 ; coinage, 337 ; Bank 
of United States, 351 ; on gov- 
ernment, 409, 410, 414, 418, 577 ; 
on glass, 639, 640 ; fruits of tar- 
iff, 641 

Hamilton Manufacturing Society, 
640 

Hancock, Gen. W. S., 423 

Hansard's Debates, 657 

Hardware, sanitary, nine firms on 
prices of, 621 

Hargreaves, 681, 684 

Harris, Townsend, 553 

Harrold, F. W., hardware, I5ir- 
mingham, 605 



XXIV 



PERSONAL INDEX. 



Harmon, L., 810 

Haskell (Moore &), reaper, 264 

Hastings, "Warren, 327 

Havre Line of steamers, 657 

Hawkins (French &), harvester,264 

Hayes, John L., 668, 669, 670, 672, 
678 

Hearn— Plutology, 163 

Heaton, J. Henneker, M.P., 658 

Herod, 704 

Heeren, 139 

Hegel, 15 

Hegewisch, 139 

Helmuth, Schwartze & Co.'s Cir- 
cular, 680 

Heyne, Prof., 139 

Herodotus on land, 138 

Helper, Hinton.R., 33 

Henfrey, H. W., on English coins, 
342, 349 

Henry, Prof., on exhaustion of 
soils, 253 

Henry III., King of England, 334 

Henry V. , House of Commons un- 
der, 409 

Henry VII., 340; VIII., 340, 341 

Hewitt, Abram S., 511, 573 

Hobbes — quoted by Adam Smith, 
43 ; on state, 132 

Homer, 61, 278, 383, 334, 645 

Hood, Thomas, 4 

Horton, S. Dana, 15 ; coinage 
and standard, 341, 342, 343, 349, 
362 

House, E. H., 553, 554 

House of Commons of Ireland, 
address of, 492 

Hough, Dr. Franklin B., 148 

Hudson, Hendrik, 189 

Hudson, James T., 268 

Humboldt, 278 

Hume, on value, 82 ; on money, 
330, 358 

Huskisson, Rt. Hon. William, 638, 
655 

Hussey, Obed. (harvester), 264 

Hyndman, on food in England, 
120; on earnings, 273 



I. 



Illinois, railway commissioners of, 

173, 311 
Illinois Central R. R. Co., 157 
Ingersoll, Robert G., on avarice, 

205, 305 



Insurance, New York Chamber 
of, 295 

" International Review," 538 

Ireland, address of House of Com- 
mons of, on Union, 492 

" Iron Age," 448 

Iron-makers, Western Association 
of, 581 

Iron and Steel Association (Ameri- 
can), 558 ; on prices of American 
and English iron and steel wares, 
590 

Irving, William, importing agent, 
605 

Isocrates, 50 

J. 

Jackson, Andrew, 38 ; strong ex- 
ecutive intluence of, 133 ; on 
Bank of United States, 351 ; on 
foreign trade and American 
labor, 381 ; compromise tariff, 
384, 629, 642 

Jacob and Esau, 309 

Jacquard, 674 

James (Apostle), on community of 
goods, 52 

James I., 340, 631, 634 

James II., 407, 426 

Jefferson, Thomas, 38 ; on navi- 
gation and manufactures, 598 ; 
on equilibrium of industries, 
598, 629, 640, 641 

Jessup & Sons, Wm., steel, Shef- 
field, Eng., 604 

Jevons, W. S., 5, 9, 17 ; how eco- 
nomics might be made an exact 
science, 34 ; definition of politi- 
cal economy, 43 ; definition of 
value, 80 ; value not due to labor, 
83 ; or demand, 92 ; on Gos- 
sen's theory of value, 94 ; on 
utility, fluctuations of, 95, 96 ; 
on value as affected by labor, 98 ; 
to lower it, 99 ; defines a market, 
100, 101 ; on rent, 243 ; defines 
labor, 289 ; on labor combina- 
tions, 302, 303 ; defines money, 
380, 869, 381 ; petulance in dis- 
cussing protection, 556-558, 560, 
571, 572 

Job. 59, 444 

Journal of the Society of Arts, 485 

Justinian, 547 



PERSONAL INDEX. 



XXV 



Karamsin, Tooke and Segun, on 

Russia, 538 
Ke Slien, Commissioner (Cliinese 

opium war), 534 
Kea-King, 540 
Keay, J. Seymour, on India, 455, 

484 ; salt tax in India, 487 
Keen Lung, Emperor of China, 547 
Keene — broker's deal in wheat, 105 
Kelley, editor of Karamsin, Tooke 

and Segun, on Russia, 528 
Kelley, Hon. William D., 38 
Kendall, Thompson I., 270 
Kent, William, 650, 651, 652 
Kepler, 24 
Kerr, Mr., 641 
King, Gregory, on price, 95, 115, 

372 
Kinnear, Mr. Boyd, on corn in 

England, 120 
Knight, History of England, 555 
Knights of Labor, 310 
Knox, Gen. Henry, 153 
Kolb, condition of nations, 26, 28, 

30, 31, 251, 476, 478, 496, 529, 

537 
Kossuth, Louis, 630 
Kon-fut-si, 550 

L. 

La Fayette, 514 

Labor Bureau of Massachusetts, 
314, 581 

Lalor, J. J., 569 

Lamb, Charles, 357 

Lane, Samuel (thresher), 264 

La-ot-zi, 550 

Lassalle, 88 

Lauderdale, Lord, on proportion 
of demand, 92 

La Vasseur, on value, 80 

Lauffhlin, Prof. J. L., 837, 353, 
866, 381. 

Lawes, Sir John, on corn in Eng- 
land, 120 

Leconfield, Lord, land of, 270 

Le Devoir, 313 

Le Play, 331 

Leicester, Lord, on corn in Eng- 
land, 120 

Leiper, Thomas, 598 

Levi, Leoni, 272 



Lincoln, Governor of Massachu- 
setts, 153 

Lin, commissioner (China), 534 

Lincoln, Abraham, 38, 577 

List, Frederick, 16 ; his work in 
Germany, 514 ; mining invest- 
ment in Pennsylvania, 515 

Liverpool, Lord, 16, 361 

Locke on value, 80 ; on rent and 
interest, 241 

Lockwood, Henry C, 268 

Londesborough, Lord, land of, 
270 

" London Academy," 490 

"London Times," 596, 598, 658 

Long, 16 

Lonsdale, Earl of, 270 

Louis XIV., reign of, 639, 641, 
673 

Louis XVI., 674 

Lubbock, Sir John, 46 

Lycurgus, 50, 138 

M. 

Macdonald, Sir John A., 531, 664 

Macphelah, 333 

MacLeod, H. D., 8 ; definition of 
political economy, 7 ; id. , 6, 9, 
16 ; on value, source of, 80 ; on 
value, 83, 88 ; on share of cap- 
ital, 180 ; on rate of profit, 191, 
192 ; rent, 241 ; on rent in new 
and old communities, 241 ; on 
rent, 243; defines labor, 289, 
333 ; coin circulates on credit, 
344 ; currency, 393, 448, 451. 

McCulloch, J. R. , 5, 6 ; on value, 
80 ; on decline of cultivation of 
breadstuffs after repeal of pro- 
tection, 120 ; on profit, 168 ; ag- 
ricultural product of England, 
177 ; rent and fertility, 238, 239 ; 
on labor, 282 ; defines labor, 
289 ; wage fund, 293 ; on labor 
combinations, 302, 373 ; on 
crises, 374, 376, 377, .394 ; on to- 
bacco tax, 481 ; on China, 538 ; 
on dependence on foreigners, 
570 : on decline of silk manufac- 
ture, 637 

McCulloch, Secretary, Hugh, 393 

McCormick, Cyrus H., (reaper) 
264 

Madison, James, 38, 629, 641, 642, 
655 



XXVI 



PERSONAL INDEX. 



Madras civil service, member of 
on labor in India, 487 

Magna Cliarta, 59 

Mallock, W. H., on earnings of 
British people, 176 ; on land- 
holding in England, 372 ; in- 
comes, 273, 274 

Mallory, Rollin R., 38 

Malte Brun on China, 538 

Malthus, 16, 199, 230 ; law of pop- 
ulation, 292, 295, 307 

Mann, Institutes of, 452 

MargrafE and sugar, 503 

Marigny, 453 

Mariner, 50 

Marsh, George P., 43 

Marshall, Chief Justice, influence 
of on constitution of United 
States, 133 

Martin, R. Montgomery, 538-540, 
541, 547 

Martineau, Miss Harriet, 372, 374, 
389 

Marx, Karl, 5 ; definition of value, 
80 ; theory of value criticised, 
88, 91 ; relation of to Smith and 
Ricardo, 88 ; theory of value 
not sustained by market reports, 
101 ; share of wages, 184 ; on 
surplus value in labor, 188 ; on 
machinery 209, 415 

Mary, Queen of England, 340 ; 
House of Commons, under, 409 

Mason, David H., 628 ; on salt, 
696 

Massachusetts Labor Bureau, 814, 
581 

May, John, 670 

Maximilian, 450 

Mazzini, 577, 630 

Medhurst, Dr., on China, 540, 

547 
Medill, Joseph, 593 
Meggins, on drain of silver, 345, 

373 
Messageries Maritimes, 658 
Metropolitan Museum of New 

York, 334 
Michigan Central Railroad Com- 
pany, 156 
Mill, John Stuart, definition of 
political economy, 2 ; metaphys- 
ical method, 9, 10, 13 ; theory 
of international values, 15, 16, 
17, 18, 23 ; definition of po- 
litical economy, 43 ; on value, 



83 ; theory of value not sus- 
tained by market news ever, 101, 
180 ; on socialism, 185, 186 ; on 
decline of profits, 194 ; error, 
195, 199, 200 ; rent and fertility, 
238 ; monopoly and rent, 241, 
247 ; theory of rent, 243 ; trans- 
portation affects rents, how, 247 ; 
on labor, 282, 289 ; on wage 
fund, 290, 292, 330, 459, 460; 
on protection and revenue, 469, 
470 ; on protection, 556, 571, 587, 
623, 634, 696 

Million, the, 320 

Milton, on India, 69 

Minerva, 334 

Mint at Bombay, 331 ; at "Washing- 
ton, 338 

Miscellaneous statistics of Great 
Britain, 32 

Mitchell, S. Aug., 552 

Moffat, Robert Scott, 558, 566 

M'ongredien, on corn laws and 
price, 112 

Moody, land and labor, 157 ; on cir- 
culating capital, 198 ; on bonanza 
farming, 219, 264 ; on inven- 
tions, 264, 265 ; tone of book, 
268 ; on great land-holdings in 
United States, 270 

Moore and Haskell (reaper), 264 

Morey — on Roman law, 130 

Morrill, tariff, 470 

Morrison, Dr., 540 

Morse, Prof., 189, 325 

Mulhall, 36, 178, 273 

Mun — on foreign trade, 65 

Museum, Asiatic, 334 ; Metropoli- 
tan of New York, 334 

N". 

Napoleon I.— On Say, effect of 
wars on capital, 211, 361, 436, 
503, 504, 510, 577, 630, 674 

Nebuchadnezzar, 334 

Nero, 667 

Newbold, Charles, first cast-iron 
plough, 264 

New England Crown Glass Co., 
64S 

New England Glass Co., 641 

New Jersey Railroad and Trans- 
portation Co., 154 

" New Princeton Review," 553 

New York Central Railroad Co., 
155 



PERSONAL INDEX. 



"New York Tribune" on funds 
of Free Trade League, 604 

Newton, Sir Isaac, 215, 571 

Nicholas, Czar, 527 

Niebuhr, 189 

Nimmo, James, jr.. Statistician 
Department of Agriculture, 106 ; 
railway freights, 221 

"Nineteenth Century," 484, 487. 

North, Edward P., 657 

North, Lord, 408 

" North American Review." 657 

Northumberland, Duke of, 270 

Northern Pacitic Railway Co. , 157 

Nott and Gliddon, 33 

Nourse, Joel (plow), 264 

O. 

Oberhampf, 674 

O'Hara, Gen. James, 577, 578. 639, 

640 
Ohio Agricultural Report on wheat 

products, 254 
Old Testament, 453 
Oriental and Levant Trading Co., 

490 
Ossian — enduring quality of high 

art, 73 
Overend, Gurney & Co., in crisis 

of 1865, 389 

P. 

Paris Monetary Conference, 336 

Parliament Committee on Decline 
of Silk Manufacture, 636, 637 

Parliament Committee on Contract 
Packets, 657 

Parliamentary debates, 555 ; Han- 
sard, 657 

Pascalis, Dr. Felix, 633 

Patent office. 264 

Patroclus, 334 

Patterson, R. H., crisis of 1865 in 
England, 389 

Patterson, William T., secretary 
of Dominion Board of Trade, 
665 

Paul (St.), on community of goods, 

Paul, inventor of roller spinner, 

681 
Peacedale woolen manufactory, 

313 
Peel, Sir Robert, 16, 638 



Pell, Read and, on American Agri- 
culture, 250 

Pennsylvania Wool Growers' As- 
sociation, 680 

Pennsylvania Railroad Co., 156 

Pericles, 547 

Perry, A. L., 56 ; rejects "wealth," 
43 ; defines value, 80 ; on labor, 
282, 557; his free-trade methods, 
571,-603, 584, 587, 589, 591, 592, 
594, 595, 599, 600, 

Perry, Commodore, 553 

Peter the Great, 527 

Phelps, Dr., 153 

Phillips, Wendell, on moral import 
of good wages, 583 

Pillsbury Flour Mills, 313, 314 

Pitt, William, 408, 410 

Pizarro, 881 

Plato, Republic, 131 

Pliny, 278, 669 

Plowden's Review on Ii'eland, 492, 
493 

Plumbing, nine firms dealing in, 
621 

Plunkett, Lord, on Ireland, 492 

Plutarch, 50, 188 

Political Economy, Cyclopaedia of, 
830 

" Political Science Quarterly," 465 

Polo, Marco, 545 

Pope, Alexander, 404 

Poor, Henry v., Railway Manual, 
145, 157 

Pope, Alexander, 404 

Porter, Robert P., on silk, 632, 
635, 636, 685 

Portland, Duke of. land, 270 

Pottinger, Sir Henry, 534 

Powis, Earl of, 270 

Prendruft, Gen., on India, 485 

Press, New York, 466 

Price, Bonamy, 9, 17 ; on Mal- 
thus' law of population, 280 ; 
on rent, 243 ; his unconscious 
humor, 292 ; on crises, 878, 879 ; 
on protection, 556, 557 ; on 
Mill's infidelity to free trade, 
557, 558 ; on agricultural hier- 
archy, 559 

Price, Mr., of Pittsburgh, address, 
448 

Q. 

" Quai-lcrly Review," 831 



XXVlll 



PERSONAL INDEX. 



"Political Science Quarterly," 
465 
Quetelet, A., on crime, 441, 444, 
445 

R. 

Railway Commissioners' Report 
of, of Illinois, 173, 311 

Rae, John — produce of England, 
177 

Raikes, Postmaster-General of 
England, 658 

Read and Pell— report of, on 
American Agriculture, 250 

Reavis, L. U., 608 

Redfield, H. T., on ratio of homi- 
cides to population, 34 

Reed's History of Sugar, 505 

Repealer's Manual, Battersley's, 
493 

Report— of Reed and Pell, 250; 
Mass. Labor Bureau, 314 ; Paris 
Monetary Conference, 336 ; 
Treasury, 388 ; on local taxes in 
England, 477 ; of Parliament 
select committee on scientific 
instruction, 596 ; of committee 
of Congress on manufactures, 
605 ; of committee on packets, 
657 ; of committee on salt, 694 

Revenue Reform Club of Brook- 
lyn, 590 

Reviews — Quarterly, 331 ; Plow- 
den's, 491, 493 ; Annales de 
Chimie, 503 ; Revue des Deux 
Mondes, 528 ; International, 538 

Ricardo, David, 4 ; definition of 
political economj^ 5, 9 ; his 
method, 16 ; on value, 80 ; no 
absolute standard of value, 83 ; 
relation to Karl Marx's socialism, 
88, 91 ; on wages, 170, 180 ; iron 
law, 185, 199 ; rent and fertility, 
238, 239, 240 ; theory of rent, 
243 ; Carey criticises* Ricardo, 
247 ; on labor's price, 289, 579, 
645 

Richard Cceur de Lion, 646. 

Ritter — as cited by Roscher, 50, 53 

Roberts, Ellis H., on revenue, 453 

Robertson — community of goods 
among Aztecs, 50 

Rochefort, 50 

Roederer, 22 

Roebuck, Mr,, 408 



Rogers, J. Thorold — as to rates of 
wages, 166 ; on protection, 453, 
556, 657 

Roscher, 2 ; definition of political 
economy, 4, 22 ; definition of 
wealth, 42, 43 ; on community 
of goods, 49, 50, 51, 52, 53 ; on 
economic labor, 64 ; definition 
of value, 80 ; on farm profit, 178, 
189 ; on rent, 240, 241 ; on labor, 
288 ; on money, 330, 569 ; on 
protection as steadying prices, 
570 

Rosconi, Count, 336 

Rothschild, Baron A de, on gold 
and silver, 364 

Rutland, Duke of, land, 270 



S. 



S'akyamuni, 550 

Saladin the Saracen, 646 

Salem, town of (Mass.), on glass, 
639 

Salisbury, Marquis of, on free 
trade, 555, 557 

Salt, Committee on, 694 

Sampson & Bros., importers, 605 

Sands & Co., A. B., importers, 
604 

Sands, Mahlon, secretary Free 
Trade League, 604 

Say, J. B., 8, 9, 82, 503, 514 

Say, Leon, 503 

Sciiieffelin, William, importer, 
605 

Schiller, 48 

Schliemann, Dr. 645 

Scientific instruction, report of 
committee on American manu- 
factures, 596 

Scott, Sir Walter, 284, 646 

Scrivenor — History Iron Trade, 
648 

Segun, Knramsin and Tooke on 
Russia, 528 

Senate Finance Committee's com- 
pilation, 644, 648 

Senior, on law of value, 94 ; on 
farm profits, 178 

Sesostris, 437, 447 

Seward, W. H. 38 

Seward, IMinister, 550 

Shadwell, J. L.,-on mercantile 
school, 18 ; on elfect of rejicnl of 
corn laws on prices, 11M, 334; 



P£!E802rAL INDEX. 



xxix 



ou tobacco tax in England, 480 ; 
on spii'its, 483 
Shakspeare, 166, 400, 444 
Shearnuui, Thomas G., 611, 613 
Slielburne, Lord, ministry, 408 
Sheridan, Ricliard Brinsley, 227 
Sidgwick, Prof. Henry, 15, 16 ; 
definition of political economy, 
43 ; on wealth, 46 ; definition 
of value of credit, 67 ; on the 
two forms of wealth, 92 ; agree- 
ment with Jevons and Gossen, 
94 ; on wealth, 205 ; on rent, 
343 ; on money, 329 ; on pro- 
tection, 557, 561,562,563, 566, 
594 ; on import duties, 620, 664 
Siemens, 189 
Sismondi, 330 

Smith, Dr. Adam, 2 ; Definition 
of political economy, 5, 7 ; of 
wealth, 42, 43 ; absence of 
in savage life, 48 ; Definition of 
value as due to labor, 79, 80 ; as 
cited by Mc Leod on value, 82 ; 
ou value, 83; criticised, 83, 85, 87 ; 
relation to Socialism, 88 ; theory 
of value opposed by Jevons, 99 ; 
in conflict with current market 
reports, 101 ; on division of 
labor, 136 ; his theory of wages, 
166, 170 ; on agricultural rent, 
178 ; on sharing between capital 
and labor, 179 ; on interest, 180 ; 
on rate of profit, 193 ; on farm 
profit, 192, 193 ; on labor, 199, 
200 ; on division of labor, 219 ; 
on retinue of servants, 235 ; on 
wages in American colonies, 
227 ; on rent, 338 ; definition of 
labor vague, 383, 388 ; on wages, 
295, 298 ; on labor in China, 
398 ; in London, 399, 333 ; on 
money, 345 ; relative value of 
gold and silver, 345, 356, 373 ; 
on taxes, 457-460, 467, 474 ; on 
France and protection in, 500, 
503, 544 ; on protection, 555, 
556, 570, 573 
Smith, Gideon B (silk), 633 
Smith, Samuel, on India, 66 
Smithsonian Institution, 253 
Society for Establishment of Use- 
ful Manufactures, 640 
Soetbeer, Prof., 363, 366, 367 
Solomon, 704 
Southern Pacific Co., 158 



Spear & Jackson, steel saws, Shef- 
field, Eng., 605 

Spencer, Herbert, 136 

Spinner, General, 669 

Springer, Hon. William, of Illi- 
nois, 25, 682 

Stanhope, Lord, 555 

Stanlej^, Henry M., contract with 
his men, 165 ; natives on Congo, 
333, 703 

Statistical account of British Em- 
pire, 177 

Staunton, Sir G., 538, 539 

Stephen, Leslie, 17 

Stevens, Thaddeus, 38 

Stewart, A. T., 181, 195, 215, 226, 
293 

Stewart, Hon. William, 38 

Stewart, definition of political econ- 
omy, 7 

Streator, tr. of Kolb (see Kolb) 

Strabo on community of goods 
among the Scythians, 50 

Sullivan, A. M., 374 

Sullivan, Sir Ed., 558 

Sumner, Hon. Charles, 38 

Sumner, Prof. William G., 31 

Supreme Court of the United 
States, 141 

Swank, James M., 645, 647, 648, 
649, 650 



Tariff, Senate Finance Committee, 
compilation of, 644, 648 

" The Academy," 490 

The American News Co., 604 

"The Chicago Tribune," 593 

"The Commercial Bulletin," 600 

"The Federalist," 409 

"The Free Trade League," 604 

"The London Times," 596 

" The Million," 330 

The Mint at Bombay, 331 

"The People's Pictorial Taxpay- 
er," 604 

"The Tribune," New York, 529, 
604 

"The Textile Record," 635 

Thiers, 503, 510, 577, 674 

Thomas, Philip E., first railway in 
the United States, 150 

Thompson & Kendall, farm of, 370 

Thornton, Mr., 15, 16 ; on price, 
96 ; ou labor, 293 



XXX 



PERSONAL INDEX. 



Thucydides, on division of land, 
138 

"Times," London, on American 
iron and steel, 596 

Toledo Steel Works, Sheffield, 
England, 604 

Tooke, on price, 96, 113, 115, 116, 
117, 389 

Tooke — Karamsin, T., and Segun 
on Russia, 528 

Toombs, Senator Robert, 30, 657 

Torrens, on profit, 178 ; on wages, 
185 

"Tribune," The, of New York, 
529, 604 

Tubal Cain, 645 

Turgot, 501, 503 
U. 

Union Pacific Railroad Co., 157 

United States — department of agri- 
culture, 252, 256 ; money, 330 ; 
treasury certificates, 335 ; mint, 
338 ; debt, 354 ; treasury reports 
on prices, 387 ; systems of taxa- 
tion, 468 ; customs compared 
with Great Britain, 482 ; consu- 
lar reports, 499, 506, 523 

University of Cambridge, 620 

V. 

Yan Wart and McCoy, New York, 
agents, 605 

Van Wart, Son & Co., Birming- 
ham, 605 

Vanderbilt, C, 189, 217, 220, 226, 
305, 397 

Vedas of India, 668 

Victoria, Queen, influence of on 
government, 410 , statute of 13 
Vict, on tobacco tax, 480 

Victor Emmanuel, 439 

Villard, Henry, 157 

Vogeler, Consul-general, report on 
sugar, 506 

Von Beust, Baron, 577, 630 

Von Robais, 673 

W. 

Wade, John, 555 

Wagner, Boehm &, 548 

Walker, Amasa, 6 

Walker, F. A., on value, 80 ; on 

wages and profits, 294 ; money, 

329, 359, 364 
Walker, Robert J., 388, 553 ; tariff 

oi 1846, 388 



Ward, Lester F., 664 

Watt, 24 

Wayland, Dr. Francis, 330, 504, 
595 

Webster, Daniel, 38, 153, 413, 577, 
669 

Washington, Georaie, 38 ; as t<j 
canals, 140-141, 629 

Warner, Consul, 523 

"Wealth," a New York financial 
journal, 43 

Wells, David A. , 438 ; on under- 
valuation, 605 ; tonnage taxes, 
654, 666 

Wenck, on Roman tributes, 454 

Western Association of Iron- 
makers, 581 

Western Pacific Co., 158 

Whateley, Archbishop, 9, 82 

White, Horace, 330 

Whitney, Eli, 686 

William III., coinage under, 342, 
407, 409 ; on woolen manufac- 
ture, 491, 670, 671 

William and Mary — coinage, 342 ; 
on wool, 670 

William IV., act of , 481 

William, Emperor of Germanj", 
516, 524, 630 

Williams, Monier, 331 

Williams, S. Wells, 540 

Willoughby, Lady, land, 270 

" Wilmington Morning Star," 698 

Wilson, Mr., 658 

Wingate, Sir George, 466 

Wood, Martin, 485 

Wool Growers' Association, 680 

Wool Manufacturers' Association, 
on prices of wool, 680 

Wright, Silas, 38 

Wright, Carroll D., 39 

Wolowski, M. L., on moral influ- 
ence of wealth, 49, 78, 528 

Wood, Jethro, (plow) 264 

Wrangell, 50 

Wu-ti, emperor, 276 

Wynn, Sir W. W., 270 

Y. 

Yarborough, Earl of, 270 
Yi Shon, Commissioner, 531 
Young, Arthur, 177, 178 
Young, Dr. Ed., 391 

Z. 



Zend-avcsta, 668 
See " General Index " at end of rolume. 



■ PEIKOIPLES OF 

ECOIOMIG PHILOSOPHY. 



CHAPTER I. 



SCOPE AND METHOD. 



1. Definitions. — Philosopliy is, in its root-ideas, the love or 
pursuit of wisdom. lu modern usage it is the body of principles 
which give logical coherency and harmony to science, as distin- 
guished from the body of facts constituting the science or branch 
of knowledge from which the principles are deduced. An eco- 
nomic philosophy would consist of the logical, coherent and har- 
monious body of jDrinciples which had been deduced fi'om a suffi- 
cient observation, collation and comparison of economic facts. 

The body of economic facts would be, if systematically arranged 
and classified, the science. The body of principles which give logi- 
cal coherency and harmony to these facts, would be the philosophy. 
The application of these principles and facts to any economic pur- 
pose would be the art or practice of economy. Economy consists 
in getting away from poverty and toward wealth, whether it is 
attained by diminution of expenditure or increased production. 
It may occur to an individual, to society^ or to the state. 

The tei-m Political Economy has been applied indifferently to 
the science, the philosophy and the art of economy, whether as 
practiced by individuals, by society, or by the state. 

It has the convenience which arises from its cajaacity to take 
on several meanings. As most of these meanings will in tui'n 
form the topic of this treatise, it would be iia no way improper to 
be content with the general name, Political Economy. As that 
name, by reason of the many uses to which it has been put, has 



2 ECONOMIC PHILOSOPHY. 

ceased to be a precise designation of doctrine, it is thought 
proper to say that among the various works which are offered to 
the pubhc on Political Economy, the present aims particularly to 
present the outlines of the economic philosophy of existing 
society, industry and government. 

In the presentation of this philosophy in its outlines, so many 
facts are necessary, that to many readers it may seem more sci- 
entific than philosophical — moz^e an array of facts than a study of 
principles. 

If, however, this book successfully explains society to itself, 
vindicating its economic methods at the bar of its conscience, then 
it is conceived its scientific quality is subordinate to its philo- 
sophic — its facts are less important than its sociodocy. If it helps 
man to know himself, in his three relations, as a unit of society, 
as a woi'ker in business, and as a citizen of the state, its moral aim 
rises far above its scientific ; yet this difference of aim does not 
alter the fact that the field in which our discussions lie is identi- 
cal with that which has so long and by so many been designated 
"Political Economy " that it would be an unavailing affectation 
to attempt to change the jiame. 

Political Economy treats of the duties of the Government to the 
people as respects their social well-being, and of the natural laws, 
principles and truths which apply to society as an organization 
that subsists by material means, growing if they are supplied and 
dying if they are withheld.* 

*.4mto<fe ("Politics and Economics," Bohn's Class. Lib., p. 1), defined politics as 
the stady of the highest possible and most excellent end and aim of the perfect city 
or state. 

He said (Id. 289) : " It is the province of political science to constitute a city from 
the very first, and when constituted to turn it to a proper use." But a city " is such a 
collection of houses, land and wealth as brings about an independent and happy life.'' 
(Jd.) " As these are the essence for which men combine into a city or state, evidently 
economics are prior to politics in the order of nature ." 

Adam Smi/fi defined political economy only in his title, viz.: " An inquiry into the 
nature and causes of the wealth of nations." 

Eoscheri^ol. 1, p. 87, "Polit, Ecbn. byLalor "), says: " By the science of national orpo 
litical economy we understand the science which has to do with the laws of the develop 
ment of the economy of a nation, or with its economic national life. Like all the polit- 
ical sciences, or sciences of national life, it is concerned on the one hand with the 
consideration of the individual man, and on the other it extends its investigations to 
the whole of human kiud." 

John tituart Mill say.s.- "Writers on political economy profess to teach, or to 
investigate, the nature of wealth, and the laws of its production and distribution ; 
including, directly or remotely, the operation of all the causes by which the condition 
of mankind or of any society of human beings, in respect to this universal object of 
human desire, in made prosperous or the reverse." 



UNITY OF LA W. 3 

The broadest law of being, of which every plant, animal and 
mind ai*e alike illustrations, is that growth arises from an ability 
in the individual to assimilate nutrition in excess of its expendi- 
ture. This is equivalent to making a profit out of its environ- 
ment. A person walking through a forest, which is a city of 
vegetation, where tree-life is forced against itself most comx^actly, 
observes that all but the outer and top limbs die for want of light. 
They can not make a profit out of their environment sufficient to 
supply their waste. The grass in the field, and the birds of the 

Henry C. Carey says : " Social science, treating of man in his efforts for the main- 
tenance and improvement of his condition, may be defined as being the science of the 
laws which govern man in his efforts to secure for himself the highest individuality, 
and the greatest power of association with his fellow men. , . . Man, the molecule 
of society, is the subject of social science. . . . Of all the departments of knowl- 
edge social science is the most concrete and special, the most dependent on the earlier 
and more abstract departments of science, the one in which the facts are the most diffi- 
cult of collection and analysis, and therefore the last to obtain development. Of all, 
too, it is the only one that affects the interests of men, their feelings, passions, preju- 
dices, and therefore the on e in which it is most difficult to find men collecting facts with 
the sole view to deduce from them the knowledge they are calculated to afford." — Soc. 
Sci. Cond., by McKean,pp. 47, 37, 33. 

Fawcett (Henry) says : " Political economy is concerned with those principles which 
regulate the production, the distribution, and the exchange of wealth." — Manual of Pol. 
Econ.yp. 4. 

Bastiat (" Harmonies of Political Economy," by Frederick Bastiat, by Stirling, p. 
G7), says : " The subject of political economy is man. But it does not embrace the 
whole range of human affairs. The science of morals hag appropriated all that comes 
within the attractive regions of sympathy — the religious sentiment, paternal and 
maternal tenderness, fiiial piety, love, friendship, patriotism, charity, politeness. To 
political economy is left only the cold domain of personal interest. This is unjustly 
forgotten when economic science is reproached with wanting the charm and unction 
of morals. How can it be otherwise ? Dispute its right to existence as a science, but 
don't force it to counterfeit what it is not and cannot be. If human transactions which 
have wealth for their object are vast enough, complicated enough, to afford materials 
for a special science, leave to it its own attractions, such as they are, and don't force it 
to speak of men's interests in the language of sentiment. . . . Take a lyre and 
chant such themes! As well might Lamartine sing his odes with the aid of the Loga- 
rithm tables! " 

Henry George (" Progress and Poverty," Lovell's edition, p. 12), says : " This asso- 
ciation of poverty with progress is the great enigma of our times. It is the central fact 
from which spring industrial, social and political difficulties that perplex the world, and 
with which statesmanship, and philanthropy, and education, grapple in vain. . . . 
It has not yet received a solution. It must be within the province of political economy 
to give such an answer." 

Henry Dunniny McLeod says "it is the science of exchanges or of values," thus 
omitting from it all relation to politics, nations or government.— Prjncipi^s of Econ. 
FhU., vol. 1, p. 103. 

Coto«. ("Public Economy," p. 26), says : "Political economy is the application of 
knowledge derived from experience to a given position, to given interests, and to given 
institutions of an independent state or nation, for the increase of public and private 
wealth." 

Elder (" Conversations in Pol. Econ." ), says it " is primarily occupied witli the laws 



4 ECONOMIC PHILOSOPHY. 

air, the artist studying at liis easel, and the banker in his directors' 
room, the sewing girl 

Sewing at once with a double thread 
A Bhroud as well as a shirt ; 

and even the charity or aid society that seeks to carry relief to 
the poor,* all live by this same law — of making income exceed 
expenditure. No coral insect can live without it and the Roman 
Empire could not get above it. 

In affirming this unity of law between Economic Nature and 
Physical Nature, we do not affirm whether the life which thus 
adapts itself to its environment is the cause or the eif ect of the or- 
ganism in which it acts. The materialist says that life is an effect 
of its organism. The supernaturalist says that the soul is of an ori- 
gin above and anterior to physics, and is the immediate cause of the 
laws which, in the living organism, contrast with the laws which 
govern mere inanimate matter. Upon this issue the economist in no 
way pronounces, when he sets out with the statement that in eco- 
nomics as in physics there are living organisms, viz : the individ- 
ual — society — the State — the world of States ; that all these grow 
and decay in their economic aspect, and that the law of the 
growth of each is the same as in physics, viz ; that it is dependent 
on the power of the individual to absorb more than it expends — 
to make income exceed waste. 

Political economy is the study of the natural laws which gov- 
ern the supply or exhaustion of the means whereby the ox'ganism 
called society grows, and of the reasons of its decline and dissolu- 
tion, t 

natural and social, which govern in the production and distribution of wealth in mate- 
rial things, with a constant outlook to the general welfare of society, so far as that 
welfare depends upon the necessaries, comforts and luxuries of physical life.'' 

Sicardo eays : "To determine the laws which regulate this distribution (of the 
whole produce of the earth, all that is derived from its surface by the united applica- 
tion of labor, machinery and capital, between the three classes of the community, 
namely, the proprietor of the land, the owner of the stock or capital necessary for its 
cultivation, and the laborers by whose industry it is cultivated), is the chief problem in 
political economy." — Preface to Pi'inciples. Works, p. 5. 

* Recently in New York city, an Episcopal clergyman named Crowley was sent lo 
the penitentiary as a swindler for purporting to run an orphan asylum without having 
the means to feed his orphans, being unsuccessful in begging them. 

+ Roscher says : " The public economy of a people has its origin simultaneously with 
the people. It is neither the invention of man nor the revelation of God. It is the 
natural product of the faculties and propensities which make man man. It grows with 
the nation, with the nation it blooms and ripens, and finally itdecljncs with the peo- 
ple."— /'o/i^. Ei'on., Lalor, 84. 



CONFLICTS OF ECONOMISTS. 5 

2. Is Political Economy a Science. — Society is made up 
in part of principles of human nature which are lasting, and of 
manifestations, which change every, hour. It combines much 
that is transitory with somewhat that is permanent. To nearly 
every economist his own system has the exactitude of demonstra- 
ble science and the conclusiveness of a final word. Yet it is but 
candor to admit, that as his work goes out to other economists, 
it is like a prisoner thrown into a den of lions. They dismem- 
ber it, and its fragments appear in the next edition of their own 
works, contradicted and refuted by piecemeal, as having con- 
tained just enough nutrition to tempt them to apply to it the 
gastric juice of dissolving criticism. So Adam Smith is modified 
by Ricardo, Ricardo by McCulloch, and all by Mill, Carey, 
McLeod and Jevons. In this discord tlie true science of politi- 
cal economy seems a dissolving vision. Each will say there is a 
science, but when search is made we find the science of each 
consists largely of that which to others is only his errors. The 
usual notion of a science is of a body of truth, beginning with 
certain exact definitions which all men who give it their study 
will accept, proceeding thence to a system of classified facts, 
which cover a well-defined sphere of phenomena, and leading 
up generally to principles or generalizations, which are accepted 
as applying to all these facts. In this sense we cannot declare 
political economy a science save by first expelling from the 
temple of science all who dispute our definitions, our classifica- 
tions of facts, or our principles. Yet they are sure to be modified 
even by our friends and disciples. 

If we include as economists all men who attract attention and 
followers by their speculations concerning political economy, 
as politeness at the sacrifice of precision requires us to do, politi- 
cal economy becomes an iiicongruous babel of conflicting oracles. 
Not a solitary term in use can be harmoniously defined. One says 
wealth is a physical substance,* one that it is a mental condition, f 
another that it is a i^atio between two quantities, X another that it is 
a difference in power between two attractions, another that it is un- 
defiaable.§ One defines labor as human time, || another as sacri- 
fice,^ another as productive force, ** one so as to include the labor of 
a man, ft but not of a hoi'se or engine, another so as to include 
beer or cider working in a barrel, or water falling on a mill- 

♦Fawcett, Manual, p. 6. t Viz., of power, capacity, and ability. Carey, Elder. 
t McLeod. § Perry. |1 Karl Mars. ^ Adam Smith. ** McCullocli. tt Smith. 



6 ECONOMIC PHILOSOPHY. 

wlieel.'^ To one credit is capital, and even coin is a species of 
credit.f To one money is coined gold or silver, J to another it 
extends to bank notes, § to another to checks. IT To one trade and 
commerce ai^e one ; to another they are opposites. To one value 
and utility are one ; to another they are opposites. One says all 
production grows out of trade; another that all trade is a tax on 
production, and is itself unproductive. Certain economists, like 
Smith and Mill, enter on their work without defining many 
terms, assuming either that their meaning is too well known to 
admit of being made clearer, or too variable to admit of being 
fixed by definition. They use the terms in several distinct 
senses on every page, and yet rest their accuracy, in tangled and in- 
tricate processes of reasoning, on the success their readers may 
happen to have in attaching to these terms, in each of their varied 
uses, the same meaning which the writer attached to it in that use. 

Some have taken refuge in a refusal to recognize any but 
some small knot of their own way of thinking as economists. 
But this is both narrow and uninstructive. It settles nothing. 
One says there is a science and it will shortly come. But 
he means " when others come to agree ivith me. I now knoio.'''' 
Another, "It is only a shifting combat in which the oppos- 
ing forces are equal, but decline to acknowledge their equal- 
ity." But this position, while it is favorable to investigation, is 
fatal to conviction, and at 'war with the singleness of truth. 
Whether political economy can justly be called a science, there- 
fore, depends on whether the word science shall first be defined 
as a body of exact and accepted truth, or as a collection of studies, 
convictions and discussions concerning matters of which one man 
is permitted to see but a part, and another man another part, and 
which in all their relations summon together complications 
of which no man can see the whole. If the former view is 
adopted, political economy is not now a science and does not 
seem likely soon to be one. If the latter view is held, then polit- 
ical economy is the highest, most important, and most difficult 
to reduce to fixit}^, or certainty, of all the sciences. 

The latter view has the sanction of August Comte, whose very 
profound classification of the sciences has found general favor 
among scientific men. He regards the sciences as standing in 
a complete logical order, beginning with mathematics, which 
involves the fewest elements and the most certaint}^, and proceed- 



*McCnllocli. tMcLeod. J Amasa Walker. § Perry. 1 McLeod. 



ITS AIM IS PBAGTIGAL. 7 

ing from thence through astronomy, physics, chemistry and 
physiology to sociology, which is the last, highest, and most 
complex of the sciences, involving the most elements and the least 
certitude. The logical feature in this order of the sciences con- 
sists in the fact that each successive science is made up of all the 
factors and elements involved in the preceding science, to which 
it adds one new element characteristic to itself, and^ach loses or 
parts with some of the certainty that belongs to the preceding 
sciences. Mathematics involves only the three elements of ex- 
pansion, duration and number, or space, time, and quantity, and 
being absolutely simple is reducible to certainty, except in its, 
very highest operations. Astronomy adds to these three ele- 
ments that of motion. Physics supplies all the qualities of 
matter. Biology adds life. 

Sociology combines man in society. What Comte here calls 
sociology, finds its introduction and first principles in political 
economy. 

3. Political Economy also an Art.* — The practical aim of 
political economy is to fit its students to judge or predict with 

* The earlier writers treat politicnl econoxy more as an art. Stewart's " Inquiry 
into the Principles of Political Economy," published 17C~, says: "The scatesman is 
not master to establish what form of economy he pleases. . . . The great 
art, therefore, of political economy, is for it to adapt the different operations of it to tlie 
spirit, manners, habits and customs of the people, and afterwards to model these cir- 
cumstances so as to be able to introduce a set of new and more useful institutions. 

" The principal object of this science is to secure a certain fund of subsistence for all 
the inhabitants; to obviate every circumstance which may render it precarious; to 
provide everything necessary for supplying the wants of the society, and to employ the 
inhabitants (supposing them to be freemen) in such a manner^ as naturally to create 
reciprocal relations and depenucncies between them, so as to make their several inter- 
ests lead them to supply one another with their reciprocal wants. . . . Political 
economy in each country must necessarily be different. . . . It is the business of a 
statesman to judge of the expediency of different schemes of economy, and by degrees 
to model the minds of his subjects so as to allure them from the inducement of private 
interest to coacur in the execution of his plan." 

This at the present day would be called economic statesmanship rather than jjolitical 
economy. 

Nino years later Adam Smith still defined political economy as an art. In the intro- 
duction to Book IV. he says : " Political economy jjroposes two distinct objects ; first 
to provide a plentiful revenue or subsistence for the people, or more properly to enable 
them to provide such a subsistence or remedy for themselves," (The later Manchester 
school would have said " to leave them to provide such a subsistence for themselves or 
go without.") " And secondly, to supply the state or common weal v.-ith a revenue suf- 
ficient for the public service. It proposes to enrich both the people and the sovereign .' ' 

Tinder the full sway of the laissez /aire school serious efforts were made to omit 
altogether the prefix " political " as savoring too much of government interference, and 
call the science " Plntology— the Science of Wealth," " Chrematistics," " The Art of 
Traffic," " Catallactics," etc, 



8 ECONOMIC PHILOSO'PHT. 

greater accuracy the consequences which, will ensue to the mate- 
rial welfare of the people from certain courses of governmental 
or social action. The art, of which political economy aims to 
present the scientific theory, is economic statesmanship. What 
the suni of knowledge concerning light is to the optician and 
photographer, that is the sum of knowledge concerning political 
economy or social science to the statesman and legislator. As 
the optician needs also to know the nature of glass, so the states- 
man needs also to know the nature of the people, and diplomacy, 
law, and many other things. But political economy should sup- 
ply him with the true theories on which all legislation affecting 
economic interests should be framed. And right here we are met 
by the practical difliculty which makes the progress of political 
economy slower than would be expected from the great impor- 
tance of the art to which it is an adjunct. In no other field of 
scientific effort have the rewards of the successful practice of the 
art, to which the science supplies the theory, been so great as to 
preclude a master of the art from becoming a teacher of the 
theory. None other than physicians and surgeons of tried prac- 
tical skill would be thought fit to teach medical science. Only 
good practical lawyers and judges can teach law. Certainly 
no man would undertake to teach watch-making, or the man- 
agement of a locomotive, who had never made a watch nor run 
an engine. Practical statesmen, however, have seldom been also 
educators, partly because college work devolves on scholarly 
men, to whom political strifes are distasteful, and partly since the 
honors and stress of a statesman's career leave him no leisure for 
less public duties. One could not reasonably ask a Pitt to 
retire from the cabinet, or a Hamilton from the treasury, to 
become an instructor of youth; and as to writers looking for 
profits to the sale of their works, it is more often those whose 
books promise a visionary millennium, than those which really 
instruct, that command a ready sale. 

Napoleon I. expressed the antagonism between practical states- 
manship ai-id the theoretical economists of his time by his course to- 
ward J. B. Say, and by his famous and forcible saying "if an em- 
pire were made of adamant, the economists would grind it to pow- 
der." Say, in turn, held views which verged toward anarcll3^ 

In England the more advanced economists acknowledge that 
political economy has fallen into odium because men not ac- 
quainted practically with either statesmanship, politics or indus- 
try, have sought to build up, on a priori reasoning, or by means of 



CAUSES OF ERROR. 9 

such experience as is accessible to a man not in public life, a 
speculative and metaphysical body of theories concerning the 
effects of legislation upo-n business, as they appear to men who 
have never been engaged in either legislation or business. It is 
therefore the only attempt ever made to construct a science out 
of the criticisms of a body of men who have not practiced the art 
whose practice they assume to criticise.* 

4. The Deductive — a priori — or Metapliysical Method. 
— The method of the a priori, deductive, or metaphysical school 
of writers on economics consists in treating it as a logic of 
human tendencies, a plexus or network of social probabilities 
deducible from what are assumed to be the well-known principles 
of human nature acting on large masses of men collectively. 
Mr. John Stuart Mill, David Ricardo, J. B. Say, and Archbishop 
Whately, are leading masters of this school. The style of these 
writers is usually the product of their assumption that political 

*Prof. Bonamy Price of Oxford says (" Pract'cal Political Economy," p. 7) : " It is 
the authority of economical writers which is declining. This diminished weight is the 
result of their mode of treating the problems of the living world with which Political 
Economy deals. Men take a shorter and a far clearer path through their own observa- 
tion than through the tangled jungle of scientific refinements." 

Mr. C. S. Devas, an apos'tle of Catholic Ethics and of Sismondi, in a work full of 
learning and acuteness (" Groundwork of Economics ") says : " It is time that some- 
thing was done in England either to restore the declining credit of what is known as 
political economy, or to replace that enfeebled body of doctrine by a worthier suc- 
cessor." Our grandfathers exulted in political economy as a grand and beneficent sci- 
ence, not the least among the glories of their age; our fathers respected it; and little 
more than twenty years ago it successfully withstood all the sharpness of Mr. Kuskin's 
reasoning and raillery. But times liave changed. There are men of intelligence who 
are beginning to suspect that much of this science is but a collection, partly of useless 
discussions and idle declamation, partly of truisms, i)artly of untruths; while the 
anarchy among recent economists on the very foundations and first principles of their 
science, as any one may see in Mr. Dillon's recent work on the " Dismal Science," is a 
matter not of suspicion, but of certainty. 

Prof. Jevons says (" The Theory of Political Economy," Preface 1 , vii) : " When at 
length a true system of economics comes to be established, it will be seen that that 
able but wrong-headed man, David Ricardo, shunted the car of economic science on 
to a wrong line, a line, however, on which it was further urged toward confusion by 
his equally able and wrong-headed admirer, John Stuart Mill. ... It will be a 
work of labor to pick up the fragments of a shattered science and to start anew, but 
it is a work from which they must not shrink who wish to see any advance of economic 
science." 

Henry Dunning McLeod, discussing the Ricardo-Mill theory, that labor (and not 
demand) causes value, says : " Surely we have had enough of this Bedlamite rubbish, 
and it may be asked,wjiy do we load our pages with it? Simply for this reason, that this 
idiotic stuff is the oflicial political economy in England at the present day! This is 
what the candidates for the civil service of India are told to believe in as the perfection 
of human wisdom, and which is still taught and recommended in our universities. 
P)-oh Pudorr (" Principles Econ. Phil." I., 653.) 



v^ 



10 ECONOMIC PHILOSOPHY. 

economy is a branch of dialectics. It is marked on every page 
by the introductory phrase, "Let us suppose," "If it be 
assumed," " If we can imagine," "Let us now introduce," "It 
would then follow," "In some cases," "But suppose a lot of 
persons," "Suppose an event to occur," " They would in general 
then require," "From these considerations (hypotheses) it will 
appear," etc. We may see a truth in Mr. Buckle's statement that 
"all history is a history of tendencies." Though we might pre- 
fer to say that history gives the events, from which tendencies 
are inferred by philosophy. But assuming that tendencies are the 
chief events of history, it does not follow that the history even 
of tendencies can be written in sentences which begin with "Let 
us suppose." 

Mr. Mill's work on this account omits, as either too laborious 
or unnecessary, any review or analysis historically of any evout, 
or of the practical working of any economic theory, except as 
we may be willing to accept the fine workings of his own reason- 
ing powers as being identical with the actual course of events. 
His nearest approach to descriptive statement consists in occasional 
quotations, chiefly from French and German writers of facts re- 
lating to the cottier, metayer, and peasant proprietary systems of 
land-holding, all introduced to illustrate his own impulsive ad 
captandum notions of how land ought to be held, rather than to 
present in logical sequence the modes and effects of existing sys- 
tems. From the standpoint of an historical investigator his book 
is as void of facts, in their economic sequence as cause and effect, 
as Victor Hugo's "Toilers of the Sea," or Charles Dickens's 
"Tale of Two Cities." As an exercise in pure dialectics or the 
art of reasoning, it is, to a certain order of minds, as fascinating 
as Plato's "Dialogues." But we may come out of it without 
knowing whether the farmers of the United Kingdom did or 
did not, in consequence of the repeal of the corn laws, with- 
draw from cultivating grain on as much land as would, if put 
in grain tillage, have produced the quantity of grain imported ; 
or whether the free imijortation of grain did or did not make 
bread cheaper or the prices of breadsttifFs less fluctuating. 

Not for the purpose here of controverting Mr. Mill, but simply 
of presenting the objections to the metaphysical or deductive 
method, we turn to his theory of international values.* He tells 
us there that ' ' the values of commodities produced at the same 

* " Political Economy,'" vol. 3, chap, xviii., p. 137. 



MILL'S METHOD MISLEADS. 11 

place . . . depend . . . upon their cost of production." 
In the spaces marked by points, Mr. Mill had inserted two 
unmeasurable quantities to be deducted from his main proposi- 
tion. These were: (1) "Jn places sufficiently adjacent for capital 
to move freely between them." (2) "Temporary fluctuations 
apart. " Who knows what is a free movement of capital as dis- 
tinguished from a constrained movement of capital ? Who 
knows what places are sufficiently adjacent for a free movement 
of capital ? If values of commodities depend on their cost of 
production, then the fluctuations in value must also depend on 
their cost of production. For of what worth would an explana- 
tion of values be which would not explain fluctuations in value ? 
But if fluctuations in value depend on cost of production, then 
cost of production (of a single commodity) must itself be a fluc- 
tuating quantity. But this is absurd, for when a thing has been 
once produced the cost of production of that individual thing is 
fixed, and cannot change. The only element which can fluctu- 
ate is the cost of producing other things like it.* If Mr. Mill 
means by ' ' cost of production " the cost of producing the indi- 
vidual thing to which the value attaches, then the value of every 
object would be fixed on the completion of it as a commodity, 
and there could be no fluctuations in value either temporary or 
permanent. If he means by cost of production the cost of pro- 
ducing other things essentially like the thing to which the value 
attaches, then values can vary with every new cost of produc- 
tion, and there is no ground for a distinction between permanent 
and temporary fluctuations. 

Eliminating these elements of fog, let us see if we really grasp 
a tangible idea when we say that values of any kind [ov in any 
place, are fixed by their cost of production. Who can raeasui'e 
one single absolute cost of production in its entirety ? The cost 
of production of my pen, when estimated absolutely as a cost to 
society, involves a cost of producing the gold from the mine, and 
the cost of producing the man who dug the gold, the implements 
with which he dug it, and the process by which the gold was sep- 
arated, assayed, melted, and worked up. The cost of the handle 
involves the cost of cutting the tree from which it was taken, 
and of inventing and perfecting the ax with which it was cut, 
and the iron and steel manufacture which rendered it possible. 
Cost to an individual is measurable, because as to him the means 

* This is styled by Mr. Carey " the cost of reproduction." 



12 ECONOMIC PHILOSOPHY. 

with -which he works have a measurable money cost. But cost 
to society, in labor, is immeasui'able, because the attempt to meas- 
ure it involves a measurement of all the antecedent labor which 
culminated in it whether mediately or immediately. The cost to 
an individual has a beginning when he pays for certain raw 
materials. But society lives perpetually, works continually, and 
has no antecedent worker to furnish it with any raw materials. 
Each attempt to compute a cost of production to society goes back 
to the time when society began the labors leading up to it — 

"When Adam delved and Eve epnn." 

Hence in referi'ing us to cost, to society, of the production of the 
thing valued, as the source of the value of the commodity, Mr. 
Mill refers us to an immeasurable quantity. 

He then proceeds to "suppose that ten yards of broadcloth 
cost in England as much labor as fifteen yards of linen, and in 
Germany as much as twenty." 

What does he mean here by labor ? The mere time of a human 
being without regard to age, sex, skill, or fitness ? Or does he 
mean the appropriate application of physical force to textile fibers 
to produce cloths ? If he means the former, then ten hours' work 
of a Hindoo coolie, without other mechanism than a hole in the 
ground to put his legs in, and a tree overhead to hang his yarn 
on, would be expected to measure against an Englishman work- 
ing at his loom. If he means the latter, then a machine in Eng- 
land, without any man in it, but producing many yards an hour, 
might be measured against a man without a machine working 
days to produce a yard. He then says, "When each country 
produced both commodities for itself, ten yards of cloth exchanged 
for fifteen yards of linen in England and for twenty in Germany. 
They will now exchange for the same number of yards of linen 
in both. For what number ? If for fifteen yards, England will 
be just as she was, and 'Germany will gain all. If for twenty 
yards, Germany will be as before and England will derive the 
w^hole of the benefit." 

He then proceeds with an intricate process of metaphysical 
disquisition of exactly the same order, and of no more value 
than those which the schoolmen of the middle ages gave to the 
question, "What would happen when an irresistible body in 
motion comes into collision with an impenetrable substance at 
rest." 

From the view of political economy taken by tlie historical 



BARREN RESULTS. 13 

school of economists, in which Adam Smith, Roscher, Henry C 
Carey, and Henry Dunning MacLeod are prominent, the exer- 
cise in mental gymnastics found in Mr. Mill's cliajiter on inter- 
national values does not lie within the domain of economic 
science — 

1. Because it is a supposititious case, and economic science 
must rest upon facts. 

2. Because it is a cloudy, foggy, and indefinable case, expressly 
made to defy human powers of analysis, and which depends for 
its claim to respect not upon the fact that it communicates knowl- 
edge, but that it resists in a moderate degree the effort to prove 
that its author slipped in his logic. 

3. Because it becomes an impossible case if its terms are made 
so tangible by construing them in a definite way, as to give 
them a definite meaning. It is not possible that in two civilized 
industrial nations, having facilities for production essentially 
alike, an inequality of the kind supposed in the I'ate of exchanging 
broadcloth against linen could exist, unless England and Germany 
were both cut off frona all trade in broadcloth and linen and their 
equivalent fabrics, not only from each other, but from all other 
countries. 

"When Mr. Mill has waded through the morass of what he calls 
"the windings and entanglements of complex international 
transactions," he comes out at last with what he calls a "law of 
the equation of international demand." He states it thus: "The 
j)roduce of a country exchanges for the produce of other countries 
at such values as are required in order that the whole of her exports 
may exactly pay for the whole of her imports." What have we got 
here save the truism that a country, like an individual, can only buy 
what it pays for, or more simply, in all exchange there is an ex- 
change. Of course, to make this true, it is necessary to regard 
the exportation of gold and silver in such quantities as to drain 
a country of its coin supply, and even an exportation of debts 
and promises to pa;/, as a payment. 

But what we arrive at is the truism witb which the chajDter be- 
gan, viz., that in all international exchange there is an ex- 
change. If something Avas got without giving any thing in re- 
turn it would be a free gift and not an exchange. Hence, noth- 
ing is evolved at the end of the chapter except what the terms 
used in the very title of the chapter are pregnant with. 

If, liowever, the principle is sought to be applied between any 
two nations without including all othex's, it is converted from a 



14 ECONOMIC PHILOSOPHY. 

truism into a falsehood. If, foi' instance, its a^Dplication be, " The 
United States must buy its manufactured goods in England if it 
would succeed in selling its breadstuffs there, it becomes a false- 
hood, " as the two facts, what we shall buy of any one nation, and 
what we shall sell to it, stand in no relation of interdependence 
whatever. We may and do sell to some nations three times as 
much as we buy of them, and buy of others five times as much as 
we sell to them. The so-called law of the equation of international 
demand might as well be applied to an individual. The total of 
. every man's outgo in the long run must equal the total of his 
income. 

5. Decline of the Metaphysical and rise of the Histor- 
ical Method. — There are certain conveniences and even charms 
in treating political economy, as Mill and Ricardo have done, as 
a study of the logic .of social tendencies merely. It fits in with 
the fact that all economic quantities are in a continual state of 
transition and fluidity — of flux and reflux. The forces with 
which it deals, based as they are on human interest and desire, 
emulation and competition, affection and emotion, vary every 
moment in direction and intensity. The values we compare vaiy 
while we are comparing them, and even the standards for com' 
paring and measuring them sometimes outstrip the values in 
their variations. The instant an economic quantity is seized in 
one point of view it insists on putting on another function, and 
appearing in another character. Terms resolutely resist firm and 
stable definitions, because the things they represent are incap- 
able of resting in the performance of a single function. 

Take the term labor. If a man carries mortar from the street 
to the roof of a building in a hod, is that labor ? Certainly not, 
if the man is a British loi'd practicing to show his muscle. It is 
amusement. Certainly not also if the man is a slave in Cuba, 
working by the compulsion of enforced ownership. In such case 
the man is capital, in the economic sense, as truly as if he were 
a steam engine or a horse. Does his labor consist in ai^plying 
physical force to I'aise the mortar, or in expending human energy ? 
If the former be true, then if a horse or engine be substituted, 
that is labor ; and, if so, we find capital laboring : and interest be- 
comes wages. 

Every other economic term, wealth, value, utilitj', profit, rent, 
interest, capital, money, land, production, ti'ade distribution, ex- 
change, consumption, taxation, savings, banks, credits, currency, 
and jjolitical economy itself eludes fixation in any one meaning, 



END OF LAI88EZ FAIBE. 15 

because the things it stands for jjerform many offices. It takes 
on of necessity a change of definition for each office it performs. 
Mr. S. Dana Horton* shows that the word "standard" takes on 
nine distinct meanings, each of them exact as to its own function. 

Mr. Mill evades defining wealth, as the law evades defining 
fraud, by saying .' ' though nobody can tell what it is, everybody 
knows what it is." 

This very fluidity, apparent everywhere in economic quantities 
and terms, begets an inclination to avoid definitions, as being 
merely fallacious attempts to attribute a fixity to the fiowing, and 
to steer clear of historical causes and effects in their sequence as 
being too complex and intractable to illustrate principles.! 

Prof. Sidgwick regards the metaphysical school of economists, 
commonly known as the English or Manchester school, as having 
reached tlie climax of its power at tlie pei'iod of the repeal of the 
corn laws (1846-50), as having begun to wane in 1860, and as finally 
losing its authoritative hold on the thinking men of England in 
187 1 . The leading principles of this school are that free competition, 
laissez faire, or to be " let alone " by the government is all that 
industry asks or needs, that the government is to be run as a fiscal 
agency, having no other concern than to provide itself with reve- 
nue and keep the peace between workers of all kinds, and that 
the actual world of industry is either at all times the best world 
possible, or if not it will become so under the stimulus of a little 
more non-interference on the part of govei-nment than it has 
hitherto enjoyed. The generation from 1828 to 1846 was largely 
occupied in giving increased popularity to this idea, whose domi- 
nant principle was laissez faire, and whose political and popular 
cure-all was called "Free Trade." 

Mr. Sidgwick dates the decline of the school from the period, in 
1871, when Mr. Mill, reviewing Mr. Thornton's book on Labor, 
and its attack on the "Wages Fund theory," acknowledged 
that the theory had been shown to be really no theory at all, but 
only a circuitous statement which ended where it began. Wages 
depend on the proportion wliich cajiital bears to labor, so long as 



* See extract in chapter on Money. 

t The philosopher Hegel is said to have been engaged In pointing ont to his class the 
" principle " of mathematical harmony which required that on logical principles there 
should he a. vacant orbit space between the orbits of Mars and Jupiter, when one of his 
pupils informed him that asteroids had just been discovered in that space. "Very 
likely," replied Hegel;*" the principles of pure reason rcnuire that the space should be 
vacant, but the accidents of Nature seldom come up to the standard of pure reason." 



16 ECONOMIC PHILOSOPHY. 

capital is defined, to be so mucli money as employers do actually 
distribute in the form of wages only, and so long as labor is defined 
to be the number of persons whom the wages thus distributed 
hire. This truism is of exactly the same nature as that just 
referred to in Mr. Mill's theory of international values. Mr. Sidg- 
wick pictures the English school of economics as receiving a rude 
shock when Mr. Mill candidly acknowledged that for fifty years 
his logic had been imposed upon by its own forceful fluency. It 
was as if he had taught that in vegetation every leaf owes its size 
and shape to the ratio which the general fund of leafiness bears 
to the number of stems on which the leaves grow. 

6. Carey's Corrective Influence. — Far more powerful 
causes, however, than Mr. Long's refutation of the wages fund 
theory (1867), or Mr. Tliornton's work on labor, was tlie growth 
in America of a school, largely under the influence of Henry C 
Carey's nine economic works and fifty-seven pamphlets, dating 
from 1835 to 1870, aided by the works of Stephen Col well, Calvin 
Colton, Prof. Bowen, Horace Greeley and others. The writings of 
Dr. Carey found their way into nearly every European language, 
and were eagerly thumbed in the libraries of every European 
university. They struck a vein of thought in harmony with 
French, German and Russian economics. They were echoed in 
the works of Frederick List and the lectures of Diihring, in Ger- 
many, by Ferrara in Italy, and in the essays of Bastiat. Cliairs 
for the special teaching of American constitutional law and 
American history were founded in German universities, and 
naturally caused much attention to be given to the views of such 
American economists as seemed to shed new light on the science. 

Dr. Carey was by far th^-rpost vigorous and sustained, learned 
and equipped, versatile and philosophic assailant of the laissez 
faire theory. He opposed the English school at evexy point — Mal- 
thus' theory of population, Ricardo's theory of rent, Mill's theory 
of international trade, Lord Liverpool's and Sir Robert Peel's 
notions on money, and in the latter seven of his works the theory 
of free foreign trade. In 1835 Mr. Carey published "an essay 
on the rate of wages," assailing the Ricardo theory that as wages 
rise profits must fall, and arguing that as profits rise wages rise. 
His eight succeeding works, presenting a complete philosophy of 
society, have been the armory from whence were originally sup- 
plied many of the weapons with which German and French 
economists fought for time in which to build .up an historical 
school. 



EFFECT OF AMERICAN WAR. 17 

The result of the American contest of 1861-65 tended far more 
powerfully than any admission by Mr, Mill to give influence and 
power to American thought. The government had practiced 
laissez faire toward slavery, letting it alone until it was found 
that it would not let the govei'nment alone ; and hence it or the 
government itself must fall. The century, whose chief business 
it had been to teach that government must not interfere with 
industry, found its most stupendous effort to be the conduct of the 
revolution for insuring the payment of wages to servants. Russia 
passed through' a like revolution. England dropped the laissez 
faire theory to fix judicial rents for Irish tenants after the prac- 
tice of laissez faire had destroyed their power to pay cus- 
tomary rents. Protection to industry and various forms of 
qualified state socialism were in the air. English opinion was 
powerless to resist them. Jevons, McLeod, Leslie Stephen, and 
even Bonamy Price discovered that doctrines which fifty years 
earlier seemed nearly self-evident were waning. The epoch of 
assumption was past. The ejpoch of proof had come, even in 
economics. Exactly why, nobody fully knows, any more than 
we know why the fashion of believing in witchcraft ceased when 
it did. But it ceased. In 1885 a convention of most of the 
teachers of political economy in the United States was held at 
Saratoga Springs. It agreed without debate that the doctrine of 
laissez faire was an error. 

7. The Historical Method is not a History of Eco- 
nomic Opinion merely. — Political economy is not a mere his- 
tory of the opinions or summary of the controversies in which 
the several schools of economists have labored to evolve or place 
in a clearer light their views. 

It would exist, as a practical art and scientific theory, among 
nations and legislators, if no books were ever written upon it. 
And indeed, no books of economic criticism could exist were there 
not the action of legislators to be criticised. Hence the basis of 
all economic discussion is practical statesmanship, and the lat- 
ter must always be regarded as furnishing the material for the 
former. In its turn, again, the basis of practical statesmanship 
is the desire of the dominant forces and classes in society, whether 
their dominance is that of numbers, wealth or other causes, to pro- 
mote their own interests, modified by the degree in which the 
growth of the altruistic sentiment i)romi)ts them to promote the 
interests of the minority or servient class, but this generally, how- 
ever, as a means of ultimately promoting their own. In turn the 



18 ECONOMIC PHILOSOPHY. 

forces which underlie legislation will generally be found to be 
the desire of the successful or powerful classes to maintain their 
success or promote their power. Political economy is in fact a 
study of the action of the influential and dominating masses of 
men making itself known through legislation, in its bearing on 
the promotion of the growth of wealth, power and freedom, as 
ethics and jurisprudence are the study of the like action of the 
dominating mass or ruling class, as it bears on questions of 
moral right or jural right. 

What the dominating mass of a state hold to be right, is 
right, for the time being, in that state. At least there is no practi- 
cal appeal. What the mass hold to be law is in like manner law. 
And what the mass hold to be economy is, for the same reason, 
economy. But what the critics say would be a higher moral 
right remains a mere private opinion until the dominating mass 
sanction it. So of law, and so of economy. Hence in any true 
history of political economy the history of legislation would 
need to come before the history of the criticism, and the history 
of the changes in human interests which brought about the legis- 
lation would need to precede the history of the legislation. But, 
in fact, all attempts to state the history of political economy 
heretofore have been attempts to narrate the course of the criti- 
cism without narrating either the course of the legislation on 
which it bore or the changes in human interests which gave rise 
to it. 

Histories of political economy are therefore pervaded by two 
fallacies, viz., the substitution of a part for the whole ; or of the 
criticisms of the economists for the history of the economies, and 
the substitution for what the economists have actually written of 
that which the historian assumes to be the purport and effect of 
their writings. It is always unsafe to accept as true the descrip- 
tion of any set of opinions in the language of its adversaries. 
This is especially true of economic discussion. One can not be 
sure of rightly apprehending the meaning of any author until he 
reads his views in his own words. 

Thus in describing the mercantile system Mr. Shad well* says : 
' ' It was supposed that money alone constituted wealth ; and as 
they never thought of disputing that wealth consisted of gold and 
silver, they held themselves bound to prevent as far as possible 
the exportation and to encourage the importation of those metals." 
Mr. Mill states this point as strongly as Mr. Shadwell. 
* " Political Economj'," b}' J. L. Sbadwell, p. 10. 



HISTORIES OF POLITICAL ECONOMY. 19 

On the contrary Mr. C. S. Devas, also reviewing- tlie history 
of the economists, says : ' ' Looking to the appearances of the 
world with which they were familiar, and seeing how commer- 
cial and political greatness belonged as a fact to those countries 
wherein the money in circulation was abundant, the economists 
whom we call the mercantile school, imagined that the econom- 
ical well-being of a state is in proportion to the amount of the 
precious metals circulating within it, and that in consequence to 
preserve and increase this amount to the utmost, is the funda- 
mental rule of economical policy. But (with some rai-e excep- 
tions) they by no means held the error often attributed to them 
that wealth consists in money alone ; nor even can they be 
charged with making light of agriculture, and wishing it neg- 
lected in comparison with manufactures and commerce." 

These flat contradictions between two sincere economists describ- 
ing the same fact, warn us how difficult a task it is to correctly 
state the history of economic discussion. 

Instead of being a matter to be lightly skimmed over as a pre- 
lude to the better comprehension of the existing economic condi- 
tion of society, it requires the largest knowledge of the present 
economic conditions of man to enable us to form any proximately 
accurate view of his past economic condition. Of the two tlie 
present is the more comprehensible, because it can be observed, 
and the past eludes us because it contains so many unknown factors. 

8. Limitatious on the Historical Method. — To us the 
ownership by an ancestor, as in Rome, of all his descendants and 
of their property, seems the product merely of a despotic spirit, an 
evident wrong which came gradually to be abolished. But to a 
Roman the incoherence of our present family system, whereby 
some members of a family miglit perish of hunger while others 
had wealth, would seem unnatural and depi'aved. We think 
the Roman unjust by forgetting that in return for allegiance 
the humble received support and security from the strong. And 
we fail to set off the degree in which the present condition of 
society exposes individuals to want in the event of the failui^e of 
their industrials efforts, while persons nearly related in blood, 
possessed of large means and capable of giving profitable direction 
to their efforts, are neither required nor allowed by law to do so. 
The key to the difference lies in the fact that in Rome society was 
chiefly organized by means of authority or force, while modern 
society is organized by means of money^ on the basis of having 
nothing but what we can pay for. 



20 EGONOMIG PHILOSOPHY. 

A like difficulty arises in the effort to compare our life with the 
life of the middle ages, in which the church ruled, or with any 
unlike form of social economy. The past being' by far the more 
obscure of the two, and the more difficult of apprehension, 
is incapable of throwing the degree of light on the present, that 
one might easily be brought to assume. People living in an 
industrial age can very imperfectly apprehend why any body 
should ever have done the amount of fighting necessary to make 
a military age, or should have esteemed athletic sports so highly 
as to have measured epochs of time by olympiads, or should have 
made reverence for the dead, rather than the comfort of the living, 
the root-idea of their architecture, as in Egypt. 

We are not greatly helped in the effort to understand our own 
period by the examples of those who would have found it as im- 
possible to do our work as we would to-day find it to do theirs. 
The remote, whether in time or space, can only in a limited way 
instruct the near. The general, whether in war, philosophy or 
economy, can only r-emain general by receiving constant aid from 
the special. No rule requires to be more frequently applied in deal- 
ing with new exigencies in business or in finance than that ' ' cir- 
cumstances alter cases, " that new wine can not be put into old 
bottles, or as Hans Breitman pleasantly puts it, 

" The mill can not grind with the water that is past." 

Lord Beaconsfleld on a meixiorable occasion parried the thrust 
that his policy at a former period difPered from his present by 
replying, " many things have happened since then." The changes 
in social conditions forbid that the economics of the jjrespnt or the 
future can travel on all-fours with that of the past ; yet still the 
unity of man makes the past the only lamp by which the future 
may be foreknown. But the law of the economic value of past 
events, or of events made distant by the unlikeness to oui-selves 
of those among whom they occur, is like the law of attraction 
in physics^t is directly as the magnitude of the event and in- 
versely as the square of its distance from us. 

It may be said generally that the more competent individuals 
become to provide for themselves the less is the obligation of 
others to provide for them, and hence moral obligations contract 
as economic competency is diffused. In the middle ages each 
social class owed the other much. The lord owed his tenants pro- 
tection and support. The tenant owed his lord obedience as well 
as rent. Perhaps obedience was his rent. Now landlords and 
tenants owe no such duties. Then the church owed the trav- 



NAMES OF DISPRAISE. 21 

eler a couch and a meal. Now it owes him only a free seat if he 
wishes to hear a sermon. Then very little of what society 
enjoyed came by pui-chase. Most of it came by the performance 
of some moral obligation. Now but little of what society enjoys 
comes without being paid for. The former state was the more 
despotic but also the more affectionate ; the latter is more free but 
also more mercenary. The former had more duties ; the latter 
more rights. 

This progress has been carried so far that one economist * writes 
on " What the social classes owe to each other," with the result 
as the conclusion that they owe nothing, and that human happi- 
ness is achieved in the degree that they claim nothing at the 
hands of others. This is extending the laissez faire doctrine in 
a new form, viz. , ' ' Not merely should the state let the social classes 
alone, but the social classes should let each other alone." Human 
nature rebels against this utter excision of moral obligations from 
social economy. It also rebels against the opposite theory that 
the state should be every body's guardian in all things. Some- 
where between these two extremes the state draws a compromise- 
Where it should be drawn is a question which some will always 
continue to argue from the moral, others from the economic 
standpoint. 

Society as an organism has health at sometimes and disease at 
others, and health in some parts and disease in others ; with this 
peculiarity that " in the diseases of the body politic the physicians 
and nurses are themselves parts of the diseased organism." 

In consequence of this diseased condition, the instant social 
questions are discussed from the moral standpoint, each faction 
finds no terms of moral eulogy sufficiently glowing for its own 
principles, and no terms of dispraise severe enough for those of its 
adversary. All facts, events and doctrines thus come to have 
their two sets of names — those by which they are known to their 
friends and those by which they are known to their enemies. 

As the traveler in India found that the gods of any one province 
would be enrolled among the devils of the next province he vis- 
ited, so the student of economics will discover that names of 
moj-al praise or dispraise serve only to indicate the quality of the 
spectacles through which the writer observes. It may be said 
generally that the only objection to the discussion of economical 
questions from the ethical standpoint is that the disputants burn 

* Prof Sumner: " What the Social Classes owe to each other." 



22 ECONOMIC PHILOSOPHY. 

with more indignation than instruction, and shed more heat than 
light. 

A very general drift of modern thought in favor of determin- 
ing social questions by a wide survey of facts is shown by tlie 
increased care and means used each year to collect statistics. In 
the United States, the federal government and the states are 
yearly increasing the extent of their inquiries. Bureaus of stat- 
istics as to labor, production, the fertility of plants and animals, 
commerce, transportation, education, etc., are in order. Cities and 
boards of trade, congressional committees and the press, concur 
in feeding the appetite for wider and sounder generalizations and 
truer judgments concerning social phenomena. They confirm 
the saying of Roederer, ' ' Politics is a field which has been trav- 
ersed thus far only in a balloon : it is time to put foot on solid 
ground." 

9. Relation of Economics to Ethics. — Questions of what 
we ought to do belong to ethics. Questions of what it is generally 
believed and held that we ought to do belong to morals. Ques- 
tions of what it will profit men and nations in the immediate 
future and in a material and secular sense to do, belong to 
economics. And questions of what it will profit a man to do in the 
absolute totality of his existence, and for eternity, belong to 
religion. There is such a filiation between all these forms of the 
one idea that it is not strange that some have treated economics as 
a branch of ethics. They hold that the shortest road to profit is 
to do as we ought, or as it is generally believed and held that we 
ought, or as we are taught that for our eternal interests we ought. 
In the middle ages, as Roscher discovers, political economy was at 
least in one instance taught as a department of dogmatic theol- 
ogy.* Doubtless there is still a very large following for those 
who discuss questions of social economy from the ethical stand- 
point, i.e.., who assume that it is much easier to know and do what 
is right, than to find out what is profitable to society in the utili- 
tarian sense. The danger of this position becomes apparent only 
when economic and ethical quacks arise, veiy sturdily insisting that 
something is morally right which perhaps has never been tried, if 
tried would be very disastrous, and is only attractive to its pro- 
posers because their fancy runs away with their judgment. 

* Roscher, Vol I., p. 102, by Lalor: " Thus for instance G. Biel (ob. 1495), the "last of 
the schoolmen," gives ns his doctrine of political economy in a work on dogmatic 
theology, in the chapter on penance, his starting point being the inquiry, how the 
economic damage caused by the sinner may be repaired." 



THE TRUE METHOD. 23 

On the other hand economic investigations often serve to dis- 
place erroneous moral notions, very sincerely held, by showing 
that they involve great injury and ai-e in fact immoral. The 
utilitarians hold that the ultimate standard of right is ' ' will it in- 
crease the totality of human pleasure and diminish the totality of 
pain." The intuitionists answer this by saying that this is a com- 
jDutation which nobody can make ; that it resolves all morality 
into expediency, which it is not, and that the sure mode of 
increasing the totality of hapx^iness is to follow our convictions 
of right as being a clearer as well as less selfish guide than our 
sense of present or future interest. Both considerations must 
bleiad and harmonize in any wise system of teaching. 

10. — The Scientific Method. — The scientific method of in- 
vestigation in political economy, as in all the other sciences, is that 
of observation, experiment and comparison of the widest possible 
array of facts, and when these results have been generalized or class- 
ified, these generalizations or deductions become economic laws. 
If, for instance, it be claimed to be an economic law that land 
should be owned by tribes, and that no private ownership of land 
should be allowed, the scientific economist will observe and collect 
all the known instances where private ownership of land has pre- 
vailed ; he will then observe and collect all the known instances 
in which tribal ownership of land has prevailed to the exclusion 
of private ownership. He will then compare the relative pro- 
ductiveness of the two systems. If he finds that tribal ownership 
stands associated with savage life and low rates of production, as 
among the American Indians, the peasantry but not the wealthier 
classes of ancient Mexicans and Peruvians, the wild tribes of 
Siberia, Mongolia, Tartary, and the Congo River, indeed with 
slave life and savage life everywhere, while civilization in Egypt, 
Greece, Rome, modern Europe, and America stands associated 
with private ownership, and the more productive and intense the 
industry the greater the scope given to private title to land, 
credits, contracts, and franchises, and that not in a single in- 
stance has any people become actively productive except through 
private ownership, he concludes that the attack on private owner- 
ship of land is an error. 

The scientific method does not object to hypothesis, or what 
Mr. Mill styles " a ^rior« conclusions, based on the laws of human 
nature.'' It only objects to the substitution of these results of 
guessing, befoi'e "testing them by experience or compai'ing them 
with conci'ete phenomena" into the place of perfected economical 



24 ECONOMIC PHILOSOPHY. 

reasoning. The sole scientific function of hypothesis is to suggest 
some new line in which investigation by observation, comparison 
and experiment may proceed. The exercise of the scientific imag- 
ination by an observer of shrewdness and experience may be of 
the highest value. Franklin imagined that lightning was elec- 
tricity before he tested it by his kite. Watt thought steam would 
move an engine, and Fulton had faith that an engine would pro- 
pel a boat better than a sail. Columbus conceived that there was 
a new world in advance of proof, and Kepler that the line drawn 
from the sun to the earth, though it differs in length every day, 
describes always equal areas in equal times. But most excellent 
guesswoi'k often proves erroneous. The guess is idle save as a 
suggestion toward one or the other of three modes of scientific 
inquiiy, viz. , by observation, comparison and experiment. 

11. The Pliilosophy of Statistics. — We cannot, with Cossa, 
say, " Let no man trust himself to fool with statistics until he is 
well grounded in theory." For this is equivalent to saying, "Let 
no man find out facts until he first knows the reasons for them. " 
Reason or philosophy is to facts what theory is to statistics. A 
sound and trained reason is only possessed by one who has made 
a wide and careful survey of the facts which justify the reason. 
So we would rather say, let no man fool with economic theories 
until he is well grounded in economic facts. Statistics are his- 
torical facts presented, in blocks and raasses, so as to show quan- 
tity, also in grades to show quality, with dates and periods to 
show momentum or force of movement, and in sequence with 
events to show causes. 

In thus commending statistics we must warn the reader that 
those who have voyaged most, upon their shoreless sea, are best 
aware of their dangers. Statistics of themselves are blind. They 
have neither judgment, conscience, perception, nor intelligence. 
Unless the person who uses them possesses these qualities they 
may be raade to say any thing. Hence, the adage has grown up 
since the advent of the Baconian, positive or statistical school, 
"Nothing can be so deceptive as figures — except facts." Excel- 
lent figures may be used in behalf of a bad theory, and deplorable 
errors may be advanced to sustain a good one. A correct theory 
will not, therefore, make our statistics true. When tlie figures are 
disproven it is not to be iiecessarily inferred that the proposition 
in whose behalf they were adduced is weakened. 

Thus, in a document designed to indicate the maguitude of 
"The Drink Bill" of the American people, the annual value of 



FIGURES THAT MISLEAD. 25 

spirituous liquors consumed is correctly stated at $900,000,000. In 
very proper contrast with this enormous waste, the cost of pub- 
lic instruction is set down at $85,000,000, and the cost of missions 
at $5,000,000. So far well ! But the statistician in comparing 
these figures with the cost to the people of their annual consump- 
tion of meat, inadvertently assumes that if the United States census 
gives any of the figures of meat consumption it must give them 
all. In fact, however, it only gives the value of the meats i^acked 
in the packing houses, these being all which can be classed under 
"manufactures," and it is as a form of manufactures only that 
meat statistics are taken. All the meat supplies furnished by the 
76,241 butchers of the United States, and all meats butchered on 
farms by those who raise it, and all poultry, game and small 
meats of every kind are omitted from the census. Hence, the un- 
wary statistician in search of the figures of meat consumption to 
compare with spirituous liquors, states them at $303,000,000, be- 
ing the correct amount named in the census, but only for the 
meats packed in packing houses. This would make the meat 
consumption for 51,500,000 people about $5 per capita per year, 
or, say ten cents per head per week. In fact, in manufacturing 
and urban populations, the cost of the meat bill is more nearly 
$1 per head per week. The consumption of bread, groceries, 
and vegetables combined is about half or two-thirds as much 
more. Assuming the cost of consumption among farmers to 
equal that in cities, the two classes of food, animal and vege- 
table, would cost about $3,300,000,000, or about four times the ex- 
penditure for spirituous liquors, which is about the proportion 
which a person of good judgment would assume if not misled by 
the figui'es. 

An imposing pretense of statistical j)roof is also sometimes 
made by collecting a formidable array of statistics of a feature 
of the case which is not in dispute, and leaping over the real 
point iu dispute without any statistics whatever that bear 
upon it. 

Thus Mr. Springer, of Illinois, in an article in the North 
American Review, purports to state in statistics, by how much 
the cost of various articles of American production is inci'eased 
to the consumer, by the duty on importations. He concedes that 
they are not increased in cost by the whole amount of the duty, 
but adojjts a purely deductive, a priori, hypothetical and unsus- 
tained fraction of a third, half, or two-thirds of the duty, and 
says it is reasonable to assume that they must be increased by 



26 ECONOMIO PHILOSOPHY. 

this amount at least. The point to which his statistics were 
needed was that of the degree in which in any one case 
the duty causes an increased jsrice. This was the knob of the 
question, and this he covered wholly by a guess. Having guessed 
at his standard, the calculations based upon it were as devoid of 
any element of statistical proof as if he had first guessed at 
a quarter of the amount sought and then multiplied it by 
four. 

Again, economists sometimes assume that statistics show as to 
one class what they only show as to a class having very unlike 
interests. Thus Mr. Fawcett says : ' ' There is no surer test of the 
prosperity of the laboring class than the low price of bread, and 
there are few statistical facts better substantiated tlian that the 
marriages among the laboring class increase with the fall in the 
price of bread." 

But Mr. Fawcett does not say whether the laboring class to 
which he refers is that which produces or that which consumes 
the bread. In 1849, when the eifort to make bread cheap in 
England by giving it free importation from abroad, regardless of 
the interests of the bread producers, culminated, the ejectments in. 
Ireland among the bread producers rose to eiglit-fold their pre- 
vious number, and the arrests for crime increased in like pro- 
portion, population diminishing in five years by three-eighths. 
Whatever force Mr. Fawcett's alleged statistics, if such there 
be, may have, it could only relate to a portion of the laboring 
class, viz. to those that labored in factories, and not on 
farms. 

There are also errors in the collected statistics which could only 
be removed by costly investigation, and, no such investigation 
having been made, no removal of the error is possible. This 
arises especially where statistics of the same fact are taken by the 
officials of two governments, as where both keep an account of 
the shipment or receipt of a product which to the one is an import 
and to the other is an export. 

Thus* in a recent year French customs officers returned the 
export of silk from France to Belgium at 36,862 kilogrammes, 
while the Belgian officers returned the import of silks from 
France for the same year at 25,947 kilogrammes. In the same 
year the export of coals from Belgium to France figures in Bel- 
gian exports as 21,121,520 cwts., whereas the same fact figures 

* " The Coudition of Nations," by Kolb, Brewer and Streeter; p. §95. 



CONFLICTS IN STATISTICS. 27 

in French imports as 19,655,869 cwts- In 1853 the export of 
wool from Belgium to France amounts in the Belgian returns of 
exports to 371,260 kilogrammes, while the French customs returns 
of arrivals of wool in France from Belgium show that 3,301,500 
kilogrammes were received. In one year the value of wool imported 
into Great Britain from France is stated in the French books to be 
11,750,000, francs or £470,000, while in the English books it appears 
as of the value of £1,280,280. In one year French r-eturns show 
an export to England of cotton to £345,760, while English returns 
show an import of cotton from France of only £180,000. The 
next year France sends to Great Britain, according to French 
returns, 952,035 kilogrammes of silk goods, while Great Britain 
receives from France, according to English returns, only 233,739 
kilogrammes. So by British returns Great Britain sends into 
France 245,925 kilogrammes of silk, while according to French 
accounts France receives from England more than twice as many, 
viz., 597,354. The English return their export of wool to France 
in one year at 2,207,741 kilogrammes, while the French return 
tlieir import of wool from England at 3,940,496 kilogrammes. In 
corn 87,716 hectoliters on one side appear as 312,768 hectoliters 
on the other. Coals start from England as 7,292,411, and arrive 
in Fraiice as 5,631,829 cwts. Comparing English customs returns 
with Belgian, 1,015,173 kilogrammes of coffee dispatched in one 
year from Great Bx'itain to Belgium, are made to arrive in Bel- 
gium as 572,613 kilogrammes. Again from England to Belgium 
4,036,049 kilogrammes of wool are exported, and only 1,643,766 
kilogrammes of wool are entered in Belgium in the same year as 
received from England. 1,676,701 kilogrammes of hops are sent 
from Belgium to England, and only 861,466 appear in English 
returns as received from Belgium. Belgium sends glass goods to 
the British Isles, in quantity 3,776,544 kilogrammes, while En- 
gland acknowledges the receipt of glass goods from Belgium in 
5,645,826 kilogrammes. It is i^robable in the cases cited that the 
returns on both sides are accurate in the mode in which they are 
taken, but that the quantities which are covered by the same 
terms are really different quantities. For instance, in dealing with 
wool, the customs officers on one side may have but one designa- 
tion for wool, or hair, shoddy and fleeces, while the other may 
liave two or three, viz. , wool and mixed, or wool, shoddy, hair and 
mixed, in which case what one sends as wool will not be received 
by the other as wool. This will make the returns differ in the 



28 ECONOMIC PHILOSOPET. 

statistics, while each will be truthful according to its own system 
and law, but comparisons made on such data must be made with 
care, i. e. , figures when compared must be known to have been 
arrived at by the same process of collection. Again it may be 
that the French system of receiving goods at the Belgian frontier 
does not distinguish between English goods coming through 
Belgium into France and Belgian goods, while the Belgian may 
call one a transit of English goods through Belgium and not an 
export of Belgian goods. It is certain that if the two countries 
classified goods in the same way, and both made correct I'eturns, 
there could be no discrepancy. 

When one sees very startling facts presented as statistics, there- 
fore, it is proper to call for the mode, or system, or authority by 
which the statistics were collected. If they were collected in 
diflPerent countries, or at far distant periods of time in the same 
country, and the contrast they present with what the common 
judgment would infer is very great, it is reasonable to withhold 
assent until it is known that the general process by which the 
contrasting data were collected is the same. 

We are told* that in France, previous to the existence of rail- 
ways, there was one passenger killed to every 335,000 carried, and 
out of every 30,000 carried one was wounded ; whereas out of 
1,781,403,678 passengers who traveled on the railways in France 
between September, 1835, and December, 1875, only one to every 
5,178,890 was killed and only one to every 580,450 was wounded. 
This makes railway traveling seventeen times safer than travel- 
ing in a diligence or ' ' stage " behind horses. On French statis- 
tics it has been estimated that if a person could lose his life only 
in railway traveling, the chances would be that he would only 
die at the age of 960 years. On Belgian railways the proportion 
killed of those who travel on railways is only one in 20,000,000, 
or one-fourth that of France. In the United States, on the other 
hand, in 1875 there was one wounded by railway travel in every 
172, 000 carried, and one killed in every 810,000 persons carried. 
Statistics also show that in England tlie dangers of railway travel 
exceed those on the continent and even those in the United States, 
being in 1876, 1,245 killed out of 538,287,295 carried, or one in 
about 430,000, which is a I'ate essentially equivalent to the old 
stasre coach rate in France. Now either the railroad travel is 



*" Condition of Nations," Kolb, Brewer and Streeter, 899. 



SAFETY m TRAVEL. 29 

much safer in France and Belgium than in England and tke 
United States, or accidents are less fully rej)orted.* 

It happens that in France and Belgium, railways are under 
government control, while in England and America they are 
under private control. If now it should also be true that, under state 
control, the railway operators who have accidents are dismissed, 
while under private control they are not, this fact might cause 
more accidents to be concealed or not reported, and might also 
cause fewer to be committed. On the other hand, in France, 
under the old diligence system, the rate of accident was about as 
great as the rate now is in England under the railway system. 

As the public mind has a fixed impression, or common-sense 
judgment, that railway travel is as dangerous as stage coach 
travel, it w^ould need fuller statistics to make it plain whether the 
pretended increase of safety of railway travel over stage travel in 
France does not result from a less trustworthy mode of reporting 
the deaths under the system of state control than under that of 
private control. If not, then a strong case is made out for state 
control over private control, as respects safety in travel, as well 
as for railways over coaches drawn by horses. 

Among the most doiibtful statistics in general use are 
tliose entertained in Europe and America concerning the popula- 
tion of China. Very eminent publicists discredit them. In ex- 
planation of certain discrej)ancies in these statistics it is said 
that when the Chinese government called for returns of popula- 
tion with the view to distributing taxes, the population returned 
was small, but when returns were called for as the basis of dis- 
tributing imperial aid or charity among the provinces the j)opula- 
tion rose to "myriads of millions.''' 

So in parts of the United States the desire of counties to escape 
taxation has led to assessments of values of both land and per- 
sonal property at from one-sixth to one-twentieth of their true 



*In 1884 the average number of miles a passenger could travel by rail without being 
killed was :* 

MILES. 

In the United Kingdom lf)4,892,255 

In New York. 173,065,302 

In Massaclmsetts 503,568,188 

WITHOUT BEING IKJURED. 

In the United Kingdom 6,992,662 

In New York 13,940.754 

In Massachusetts .' 28,955,630 

* Dorsey on English and American railroads, 18. 



30 ECONOMIC PHILOSOPHY. 

value. In one case tlie Supreme Court of Illinois, acting under a 
statute which required all land to be assessed at its full and fair 
value, corrected an assessment of railroad property conceded to be 
at only one-third its value, as being too high, on proof that the aver- 
age assessment of other lands in the county was at only one-fifth 
of their value. And in the city of Chicago in the ten years from 
1871 to 1881 assessments of aggregate values of real and per- 
sonal property declined for the whole city by two-thirds, whereas 
the actual values nearly doubled. 

So in the empire of France prior to the war of Napoleon III. 
against Germany ending in Sedan, the published statistics of the 
French army called for 1,400,000, whei'eas only between 400,000 
and 500,000 men were in the service. 

Again, in the debates on the slavery issue, preceding the war 
of the rebellion, Mr. Toombs and other Southern senators cited 
the small returns of pauperism in the Southern States against the 
large returns in Massachusetts as evidence of the greater wealth 
of the Southern States. To this it was replied that returns of 
pauperism measured only the extent of the state provision for 
the relief of the poor, and not the extent of the poverty. A 
state might escape all statistical appearance of pauperism by 
making no provision whatever for its poor. 

12. The Results of Statistics. — The difference in certainty 
between the a priori and the historical method will appear by con- 
trasting the perfect blank to which the mind of any a priori 
reasoner would be reduced if asked to say how many bachelors in 
France would marry single women in any given five years ; or 
how many would many widows ; how many widowers would 
marry spinsters, and how many widowers would marry 
widows. But let any child of fifteen years of age be told what 
the actual proportion was in the three following periods, of five 
years each, and he could instantly answer the inquiry for any 
future period within a narrow margin. The proportions were:* 

Years 1836-40. 1841-45. 1846-50. 

Bachelors with spinsters 8,339 8,386 8,355 

Bachelors vvitli widows 351 354 371 

Widowers with spinsters 983 937 934 

Widowers with widows 320 323 340 

Any person glancing at this table could safely predict that in 
the five yeai^s from ]880 to 1886 in France the marriages of single 

* " Condition of Nations," p. 27, 



MARRIAGES AND IIEALril. 31 

men to single women would be between 8,300 and 8,400, that the 
marriages of bachelors with widoAvs would not vary 50 from 350, 
that the marriages of widowers with spinsters would be within 50 
of 950, and that the inam'iages of widowers with widows would be 
between 315 and 350. 

Still more difficult would it be on any a priori basis to deter- 
mine how many men under thirty years of age or under forty- 
five will marry women of over 60 years of age in Belgium. The 
case comes entirely within our reach, when we learn that in the 
six following periods of five years each, women of over 60 married 
men of the ages hei^e given :* 

Vpv\c,(\^ nf "i vpar<? '^^'^ °^ 30 years Between 30 and 

Feriodb ot J years. and under. 45 years. 

1841tol845 Twice Six 

1846 to 1850 Once Six 

1851 to 1855 Once Six 

185Gtol860 Once Six 

18G1 to 1865 Once Six 

13. Utility of Statistics. — The national utility of such sta- 
tistics may be illusti-ated by the fact that the belief once widely 
prevailed that people subjected continuously to an enervating 
climate became " acclimated," so that it affected them less than 
those newly brought under its influences. If this were true it 
would be the policy of the British government to continue troops 
permanently at whatever post they were sent to. If the reverse 
were true it ought to change them frequently. Statistics were 
collected of past experience, and it was found that the mortality 
was twice as great among those continuously subjected to the 
strain of a bad climate as in those exposed off and on, or, in effect, 
that the longer the human frame was exposed to injurious con- 
ditions the less was its power of resistance. Hence the govei^n- 
ment ordered that no troops should be stationed in distant colo- 
nies more than three years. The result was that the average 
annual mortality of British troops serving abroad, which had been 
previously 48.58 in 1,000, was, subsequently to the order, 24.2, 
a reduction of one-half. 

In certain cases statistics relating to health point the way to in- 
vestigations concerning the causes of diseases as related to either 
climate, diet, water, or hygiene of particular districts with irre- 
sistible foi'ce. Thus in France, out of 100,000 recruits in one de- 
partment of the Pas de Calais, only 118 had to be exempted from 

* " Condition of Nations," p. 27. 



32 ECONOMIC PHILO SOPHY. 

service for scrofula. In another depai'tment immediately contig- 
uous (du Nord) 2,809 out of 100,000 were exempted for the same 
cause. One department contained not one case requiring- dismis- 
sal for glandular disease, anotiier contained 8,833 in 100,000. In 
one only 36 in 100,000 were incapacitated through loss of 
teeth, in another 6,700. 

14. Regulai'ity of Phenomena Shown by Statistics. — 
Accidents in coal mines are so regular that in England the pro- 
duction of 89,419 tons of coal costs a life, in Germany the produc- 
tion of 70,461. Among the miners of Frieburg 1 man and 12 
women in 10,000 reach the age of 90 years. Among the general 
laborers 10 men and 2Q women out of 10,000 reach the same age. 
Relief from all woi'k by retirement from business tends to shorten 
life and brings it below that of the peasant. Statistics also show 
many forms of peculiar natural compensation, as that years of 
great epidemics will be followed by years of so much less than 
the usual number of deaths, and with such an increase of births 
as to nearly restore the population to what it would have been 
without the epidemic. 

One of the most important facts disclosed by statistics is the con- 
stancy of the ratio which crime, and other forms of action whicli 
are believed to rest on perfect freedom of the individual, will bear 
to society and to certain of its conditions, especially illiteracy 
and destitution. In Great Britain'^ the record of coroners' in- 
quests for the three years 1865, 1866, and 1867, shows a constancy 
in crime like or exceeding that which pertains to the revenue or 
to any department of production. 



Murders 
Killed - 

Justifiable homicides - 
Suicides - - - 
Accidentally killed 
Deaths, cause unknown 
Found dead 
Natural deaths 



1865. 


1866. 


1867. 


227 


272 


255 


282 


223 


179 


6 


5 


6 


1,397 


1,360 


1,356 


11,397 


11,263 


11,173 


222 


225 


308 


2,657 


2,697 


3,703 


8; 823 


8,882 


8,870 



Total - 25,011 34,936 24,648 



* " Miscellaneous Statistics of Great Britain," vol. i. 



POVERTY AND CRIME. 33 

Of this total : 

Males 17,566 17,496 17,304 

Females - - - - - - - 7,445 7,430 7,344 

15. Statistics Taken With a Bias. —Statistics have been 
extensively taken in most countries to show the proportion which 
crime bears to illiteracy, to particular forms of religious faith, 
or to intemperance, while in very few cases ai^e we able to learn 
the degree in which crime results from poverty. It is important 
that those who have charge of collecting statistics for govern- 
ments should be without bias or theory as to what the statistics 
ought to prove. While in ordinary years in Ireland the arrests 
for crime are only from 4,000 to 5,000, in 1849, the culmination of 
the famine, they rose to 41,989, from which they fell to 11,788 in 
1854, simultaneously with a fall in the number of ejectments of 
small householders from 74,171 in 1850 to 8, 989 in 1854, to 4,972 in 
1862, 311 in 1869, and 444 in 1870. Again in Cis-Leithania (Aus- 
tria) in 1871 out of 22,630 persons convicted of crimes, 18,820 were 
utterly destitute, 2,637 were on the verge of destitution, and only 
163 were well-to-do. 

It results in errors of inference also, in the treatment of sta- 
tistics, both in politics and economics, to display abnormal indus- 
try in collecting the facts which are supposed to be the effects of 
a particular cause, and to make no statistical or other research 
which might develop other causes not recognized, or show a 
greater relative power in them than in the one cause assumed. 

For instance. Helper's " Impending Crisis " displayed with great 
fullness the superiority of the productive industries of the Northern 
States over those of the Southern, leaving it to be inferred that 
this superiority was wholly due to the relative conditions of the 
laborer of the two sections as being the one free and the other 
enslaved. It made no account of the difference, in quality and 
productive value, between a population wholly European, inheri- 
tors of thirty centuries of civilization, and a population, forty 
per cent, of which was African, inheritors of but three centuries 
of civilizing influence. Here the statistics might all be true, but 
the inference might require to be modified by other statistics 
showing the relative productive value of newly civilized races com- 
pared with those among whom habits of pi'oduction had been longer 
inherited. Nott and Gliddon, in their work on " Types of Man- 
kind, " had presented historical data tending to show the prime- 
val and perpetual mequality of the two races, white and black, 



34 ECONOMIC PHILOSOPHY. 

leaving it to be inferred that this inequahty necessarily justi- 
fied slavery. The historical data might be correct, and the infer- 
ence exaggerated. 

So Mr. H. F. Redfield published a careful collection of statis- 
tics showmg that in the twenty years after the war of 1861-5, up- 
wards of forty thousand homicides were committed in the South- 
ern States, that a very large proportion of them went unpun- 
ished, and that the ratio of homicides to population was several 
times greater than in the Northern States. The inference appeared 
to be that the Federal Government, whose police powers were so 
imperfectly developed that it was powerless to prevent the assas- 
sination of two of its presidents, should exercise police jurisdic- 
tion either throughout the South or throughout the Union. It 
was thus assumed that the ratio of murders would be equalized 
by bringing the two sections under one administration of law. 
This again overlooked the fact that one of these sections was al- 
most wholly of one race, while the other was divided nearly 
equally as respects numbers between two races, between which 
marriage was repugnant, and social equality and sympathy prac- 
tically impossible. No observant person can have any reasona- 
ble doubt that an introduction into any one northern state, of an 
alien race to the extent of forty per cent, of the whole, too un- 
like the existing to intermarry or associate, would be strenuously 
opposed on all sides, and if permitted would greatly increase the 
rate of homicide. 

The necessity of collecting duties on imports leads also to the 
collection of very full statistics of imports and exports in 
most countries,* while so far as the internal trade remains 

* W. Stanley Jevons (" Theory of Political Economy," p. 23), says : " I do not hesi- 
tate to say, too, that economics might be gradually erected into an exact science if only 
commercial statistics were far more complete and accurate than they are at present, f?o 
that the formulae could be endowed with exact meaning by the aid of numerical data- 
These data would consist chiefly in accurate accounts of the quantities of goods pos- 
sessed and consumed by the community, and the prices at which they are exchanged. 
There is no reason whatever why we should not have those statistics, except the cost 
and trouble of collecting them, and the unwillingness of persons to afford information. 
The quantities themselves to be measured and registered are most concrete and precise. 
In a few cases we already have information approximating to completeness, as when a 
commodity like tea, sugar, coffee, or tobacco is wholly imported. But when articles 
are untaxed and partly produced within the country, we have yet the vaguest notions 
of the qnantities consumed. Some slight success is now at last attending the efforts to 
gather agricultural statistics ; and the great need felt by men engaged in the cotton 
and other trades to obtain accurate accounts of stocks, imports, and consumption will 
probably lead to the publication of far more complete information than we have hith- 
erto enjoyed. The deductive science of economics must be verified and rendered use- 
ful by the purely empirical science of statistics. Theory must be invested with the 
reality and life of fact." 



POBEIGN TRADE. 35 

Untaxed, no government supervision exists over it, and no 
statistics of it are preserved. This brings into the fore- 
gx'ound the imports and exports of a country, as if these were 
the substance of a nation's welfare, whereas, in a country of large 
extent and divei'sified productions, the import and export trade 
combined may not be a hundredth part of its internal trade in 
volume or importaijce. There have been long periods of years 
when the tonnage and values transported through the Erie canal 
alone exceeded the entire imports and exports at all the ports of 
the United States. Moreover, if a manufacturing section like 
New Eugland happens to be an indejiendent nation by itself, all 
the commodities it sends out figure as " exports," and all the food 
and raw materials it buys appear as imports. In this case the ex- 
port of shoes from New England* would be twenty-fold that 
from Great Britain,! yet her industrial activity might be less than 
it now is, though by reason of New England being part of the 
Union, and a large part of her shoe trade being with other parts 
of the United States, from whence also she buys much of her raw 
materials and food, this entire trade, which is just as valuable as 
it could be if New England were an independent nation, cuts no 
figure in any schedule of imports or exports. 

Certain kinds of statistics are thus brouglit into prominence 
because the necessity of collecting a particular tax causes them 
to be fully and accurately collected, and not because they are the 
best by which to test a nation's progress. Writers who have a 
bias in favor of regarding this class of statistics as identical with 
national prosperity, will cite the larger foreign trade and banking 
of England, whose small area and insular position cause her to 
depend largely on foreign trade and banking, as proof of her su- 
periority over countines like Russia and America, whose real 
greatness would not be seriously diminished, and might in many 
departments of industry be increased, if their foreign trade were 
wholly extinguished. J 

*100,000,000 pairs . t4,200,000 pairs. 

tFor instance, Sir Thos. Brassey says (" Work and Wages," p. 1C8) : " The supe- 
riorityof England over every competitor in the industrial field, i? sufficiently proved 
by the proportion of our exports per head of the population. In England the rate is 
£0, 3s., 2d., while in France it is only £2, 18s., 3d., and in Italy, £1, 4s., 8d." 

These facts merely indicate insular position. If London were insulated from Great 
Britain into a separate nation, so that all its trade with England would count as "im- 
ports and exports," it would be found far greater than that of the whole of Great 
Britain. On the other hand, unite in one empire Great Britain and the colonies with 
which the British people trade, so that their present trade with them will be left out of 
"imports and exports," and the foreign trade of the whole empire would shrink 
etatistically, though the actual trade might increase. 



36 ECONOMIC PHILOSOPHY. 

16. Tlie American Impulse Toward Economic Prog- 
ress. — Circumstances have made the United States of America, 
during the past half century, the field of most easy and rapid 
progress in the development of economic science. It has been 
the country of by far the most rapid growth in wealth. Where 
wealth grows most rapidly the laws governing its growth will be 
most successfully studied.* This follows as naturally as that the 
military art should develop most rapidly during war ; that fine art 
should achieve its best works where most painting and sculpture 
are evolved ; that most agricultural implements should be in- 
vented where agriculture is most extensively conducted, or that 
soils should grow in fertility most rapidly where the soil is most 
intensively tilled. 

The United States, by presenting thirty or forty systems of bank- 
ing under state control, followed by one under national control, 
have afforded the best school in which to study the monetary 
side of political economy. By its varied experience in manufac- 
tures, its rapid development of railways, its diffusion of free edu- 
cation under state control and aid, all being more or less under 
nearly forty independent systems woi'king side by side, it has 
affoi'ded the most apt school in which one having economic in- 
sight could observe. 

Every economic measure has endured in the proper committee 
of state or national legislation the assaults of critics engaged in 
the particular kind of business which the measure would most 
affect, and whose pursuits rendered them most competent to fur- 
nish original information bearing most directly on the point. 
These have moi'e value than the data which have yet found their 
way into books. If a canal were to be built, both those living on 
its route and those who could derive no immediate benefit would 
be heard. If a duty were to be laid or removed, both importers 
and manufacturers of the particular article on which the duty 

*MulhaU, a leading English statistician, says of us : " Every day that the sun rises 
upon the American people it sees an addition of two and a half millions of dollars to 
the accumulated wealth of the Republic, which [is equal to one-third oi the daily ac- 
cumulations of mankind. 
They are as follows : 

United States $825,000,000 per annum. 

France 375,000,000 " 

Great Britain 325,000,000 " 

Germany 200,000,000 " 

Other countries.. . 725,000,000 " " 

See also Gladstone's remarks in " Our Kin Beyond the Sea." 



THE STUDY OF INTERESTS. ^1 

was pi'oposed to be laid would attend. In this manner the bear- 
ing of legislation on rival industries would be studied in the light 
of the practical knowledge i)ossessed by the men who conducted, or 
desired to conduct the industries, or who purchased or desired to 
purchase their product. 

It was the necessity, on the part of rulers, to accommodate the 
action of government in lajdng taxes to the industrial wants and 
circumstances of the taxpayers, that originated the British House 
of Commons, and with it that bi-camei'al, or two-chambered 
repi'esentative legislature, which is so closely copied in our 
House of Representatives, not only in the federal government, 
but in each of the state governments. The British legislature, in 
its incej)tion, was a council of notables summoned to advise the 
king. The Commons were an influential lobby of taxpayers 
of note who convened to petition the king and lords as to the 
mode in which they should be taxed. The formula of en- 
actment recited that the laws wei'e passed by the king in 
person, with the advice of his lords, spiritual and temporal, upon 
the humble petition of the Commons. Hence, free popular 
government in modern times grew out of the principle of 
respect for a lobby consisting of business men, producers and 
consumers, who sought to explain to the law-makei's the practical 
effects of proposed measures of legislation. It still remains true 
that it is when the business interests immediately affected by 
legislation of any kind appear before the committee of ways and 
means of the house of representatives to explain to legislators 
intelligently and from experience what are the economic effects 
of legislation, past, present or prospective, on their personal in- 
terests, that the head waters of practical political economy are 
reached. If legislators can not find out what the effect of pro- 
posed legislation will be by inquiring of those whose intei-ests it 
will affect, they can not find out at all. Whether these interests 
when known are of a kind which .should be regarded rather than 
others with which they may conflict, is a question which addresses 
itself to legislative discretion. But of the fact that the most im- 
portant source of enlightenment for a legislator is the testimony of 
the man upon whom his legislation is to act, there can be no 
doubt. It may be interested. But the adjusted aggregate of all 
private interests constitutes the public interest. It may be sel- 
fish. But tlie aggregate selfishness of a Avhole people brought to 
bear to secure their collective welfare, is patriotism. 

The word " lobby " is an opprobrious word, while the sacred 

* Guizot on Rep. Gov... pp. 460-477. 48i?-507, 513, r,17. 



S8 ECONOMIC PHILOSOPHY. 

right of the people to petition for a redress of grievances is the 
most popular and indestructible boon which the constitution 
affords. Yet there is no other name for the delegation of citizens 
which comes to the capital to make a petition concerning legisla- 
tion effective than "the lobby." It is one of the contradictions 
between the purity of the ideal and the corruption of the real in 
politics, that the right of petition should continue to be the sub- 
ject of profound reverence, while the men who exercise the right 
should be assumed to be almost of necessity engaged in influen- 
cing legislation corruptly. In fact, no influence is more useful or 
necessary to a legislature which is called upon to jjass laws of a 
kind that bear upon economic values, as nearly all laws in some 
manner must, than that of the persons whose economic interests 
are thus affected. And, on the contrary, no doctrine is more 
pernicious in practice than the despotic notion that a legislature 
should approach its work with an ideal reverence for some cast- 
iron rule or so-called "principle," which is derived from some 
theorist of high repute, whether Aristotle, Adam Smith, or any 
other, and is so sacred that it is not to be subjected to critical anal- 
ysis at the hands of all who feel that they will be injured by it. 

Statesmen like Hamilton, Madison, Jefferson, Washington 
himself, DeWitt Clinton, Gallatin, Calhoun, Jackson, Clay,Web- 
ster, Choate, EoUin E. Mallory, Silas Wright, Benton, Cass, 
Douglass, Lincoln, Hale, Seward, Chase, Thaddeus Stevens, 
Etheridge, Stewart, Sumner, Garfield and Kelley are, and should 
be, closely studied by American students for their economic opin- 
ions. The chapters bearing on economic topics in the writings of 
Hamilton, Horace Greeley and James G. Blaine, and in the 
speeches of the great debaters in Congress, form an inexhaustible 
mine of economic instruction. What practical men say, while 
under criticism, and in the presence of the enemy, and liable to 
cori-ection, brings us nearer to the economic life of the people than 
didactic works are apt to do. 

17. The United States as ai^ Economic Instructor. — 
In America the author whose teachings are most original, influ- 
ential, valuable and authoritative on all economic and social 
topics is the government itself, in all its enginery — national, 
state (including its machinery of elections), municipal and local. 
The census of the United States, compiled every ten years since 
1790, the censuses of most of the states compiled in the interven- 
ing fifth year, or every five years, the debates in Congress, as 
published in the Congressional Globe, the messages of the Presi- 



CENSUS TEACHINGS. 39 

dents and the reports of the heads of departments, especially that 
of the treasury, agricultural bureau, and foreign consuls, the 
messages also of the governors, and reports of the state officers, 
and the debates in the legislatures of the respective states, the city 
councils of cities and the town meetings of towns, are the point 
of contact between the popular mind and i^ractical political econ- 
omy. England followed the United States in 1801, in taking a 
census. Besides these, the special investigations made and reports 
published by committees of Congress upon questions relating to 
revenue, coinage, banks, shij)ping, railroads, mining, canals, or 
other internal improvements, and the statistical reports of asso-' 
ciations representing j)roducers, supersede in interest and often 
exceed in economic applicability to our situation, and even in sci- 
entific value the purely economic discussions of persons who 
are removed from us by distance, time or lack of familiarity and 
sympathy. Facts and figures, however official or truthful, must 
be set in appro^jriate relation to all other facts and implications, 
or their use may still in effect, deceive. 

Facts of every kind can be handled deceitfully, and made the 
means of misleading the unwary. This is especially true of the 
facts and omissions of the census. 

Of some products the annual crop is given — of others the total 
stock on hand ; many very extended and valuable products are 
omitted altogether. Mr. Carroll D. Wright has effectively called 
attention to the fact that in taking returns of capital invested in 
manufactures or other industry no returns are made of borrowed 
capital, and that in this manner the ratio of wages to capital and 
of profits to capital have both been overestimated. This, how- 
ever, points only to a more perfect system of taking the census. 
The amount of exaggeration and misrepresentation which the 
census prevents is incalculably greater than that which it pei-mits 
to exist. 

Second only to the government of the United States in influ- 
ence as a teacher of economic science is the American newspaj^er 
press. It has not wholly emerged from that youthful period in 
which discussion is carried on in a disputatious rather than in a 
scientific spirit. As a whole, however, its method is nearly as fair 
and not less intelligent than that of the writers of books. It is 
gradually learning that government, after all, calls for skill and 
study as well as mere honesty and patriotism. With all its 
shortcomings it may be truly said that while financial and eco- 
nomic questions, especially the tariff question, have seldom in the 



40 ECONOMIC PHILOSOPHY. 

American press been treated as ably- as in Congress, they have 
continually been discussed by both Congress and the American 
press with a degree of wisdom and fairness far greater than any 
which have marked the English economists generally since Adam 
Smith. It has been unfortunate for economic science that it has 
been deemed a point of political good-breeding in England since 
1846 to bow when the term "free trade" is mentioned as if it 
were the host, to lift one's hat as if it were the queen, and to shed 
tears of patriotism as if it were the flag. In fact it is only a 
mixed experiment, fi'eighted with evils not easy to calculate. Its 
partial trial cost indeed the expatriation of millions of farme]\s, 
the fortunes of some, and even the lives of not a few of those 
of the poorer class. But so long as the prowess of the British 
army extends British markets adequately to keep Biitish spindles 
going, the ruin of the farmers can be atoned for by the prosperity 
of the manufacturers. To perceive this has constituted the dis- 
tinctive function of the Manchester school. 



CHAPTER II. 

WEALTH. 

18. Wealth and Poverty — Social. — Wealth, in ordinary 
speech, is apphed to a large accumulation of property in one pei'- 
son, or as brought into one point of view, as when we speak of 
the wealth of some one person, city or state. In political economy 
the term wealth expresses the abstract idea or quality wherein 
these large masses of wealth are identical, in substance, with the 
smallest quantity, though it be the sum paid to a laborer for a 
day's work, or by him to a restaurant proprietor for a meal. 
Wealth, therefore, in the economic sense, rejects the element of 
quantity which is associated with the term in colloquial usage, 
and retains only th6 quality wherein. a small sum of wealth is 
identical with a large one. Wealth, in the colloquial sense, stands 
to wealth in the economic sense, as the term ' ' ocean " does to the 
term " water," ocean conveying the idea of a vast quantity, while 
" water " is as fully met by a glassful as by a sea. So a boot- 
black's fee is as truly wealth, economically, as the largest estate. 

Economic wealth would be tlae power to satisfy one's desires, 
provided desire were not in itself an illimitably expansive quan- 
tity, and therefore incapable of satisfaction in any absolute sense. 
Wealth is, therefore, a power to command the services of our fel- 
low men. When these services are commanded by force only, as 
in slavery, and under barbaric despotisms, force becomes the 
chief source of wealth. Wealth then takes on the form of slave- 
owning, or seigniorage, or lordship, over many retainers, servants, 
henchmen, or soldiers. In commercial periods the exercise of 
force is relegated to the government and its army and police. 
Wealth then becomes the power to command the voluntary sei*- 
vices of men by paying for them. In the degree that a man pos- 
sesses much of this power he is wealthy. Possessing little of it 
renders one poor. But even the jDOor obtain all the material com- 
fort they enjoy through such share of wealth as is theirs. 
Wealth, therefore, does not consist, in commodities, services, 



42 ECONOMIC PHILOSOPHT. 

money, lands, or pleasures, but in the j)ower to control them at 
will by compensation.* 

Wealth may again be defined as the removal of povei^ty. 
liideed if the logical, historical order were observed, poverty, as 
the antithesis and antecedent of wealth, would be entitled to the 
prior definition. Poverty is the condition of unsupplied want — 
of hunger, thirst, nakedness, destitution and inability to com- 
mand the services of one's fellow men. It pertains to all human 
beings at birth, except in so far as law, originating in parental 
affection, may have invested them with a title to the affectionate 
care of their parents, or to certain rights to inherit property from 
their ancestors or relatives. It is the characteristic of all nomad- 
ism, like that of the Australian natives, and of all savageism. It 
diminishes with barbarism — the drift toward civilization being 
always proportionate to the growth of the wealth of the aggregate 
society. Civilization is the intellectual aspect, or name, for the 
same increase in the comj^lexity of individual rights and powers, 
and the same development of personal liberty, relatively to com- 
munal, tribal or state power, of which the growth of capital, or 
wealth is the economic aspect, or name. 

* Adam Smith (" Wealth of Nations " by McCuUoch, p. 13), says : " Every man is 
rich or poor according to the degree in which he can [or can not] aitord to enjoy the 
necessaries, conveniences and amusements of human life. But after the division of 
labor has once thoroughly taken place, it is but a very small part of these with which a 
man's own labor can supply him ; the far greater part of them lie must derive from the 
labor of other people. And he must be rich or poor according to the quantity of that 
labor which he can command, or which he can afford to purchase. 

H. C. Carey says wealth consists in the power to command the ever gratuitous ser- 
vices of nature.— /Joc. 8ci.,by McKean,p. 100. 

Bast iat (." B-axmomcs of Economics," tr. by Stirling, p. 181), says : "The vulgar 
employ the word wealth in two senses. They say ' the abundance of water is wealth 
to such a country.' In this case they are thinking only of utility. But when one 
wishes to reckon up his own wealth, he makes what is called an inventory, in which 
only commercial value is taken init) account. 

" With deference to the savants I believe the vulgar are right for once. Wealth is 
either actual or relative. In the first point of view we judge of it by our satisfactions. 
Mankind become richer in proportion as they acquire a greater amount of ease or 
material prosperity, whatever be the commodity by which it is procured. But do you 
wish to know what proportional share each man has in the general prosperity ? In 
other words, his relative wealth. This is simply a relation, which value alone reveals. 
because value is itself a relation." 

Roscher seems to use the term " goods" for '• wealth," and says : " Goods are any 
thing which can be used, whether directly or indirectly, for the satisfaction of any true 
or legitimate human want, aud whose utility for this purpose is recognized." ("Pol. 
Econ. by Lalor," vol. i, p. 53 ; chap. 1, sec. 1.) He therefore defines economy as the 
systemized activity of man to satisfy his need of external goods. 

Henry Fawcett ("Manual," p. 6), says : " Wealth may be defined to consist of every 
commodity which has exchange value," 



CABBY'S DEFINITION. 43 

Mr. Carey's definition of wealtli as ' ' tlie power to command the 
always gratuitous services of the great forces of nature " is excel- 
lent when understood in Mr. Carey's sense, and may be broader 
and more philosophical than that we have adopted ; but it involves 
much study to comprehend, and its full meaning grows upon the 
mind only gradually, as it does in the class of truths called mys- 
tical. The word, nature came into the English language with a 
religious meaning, as distinguishing what a man is at birth in 
contrast with what he becomes by grace or divine {supra- 
mundane) influence. From this it passed to mean the constitu- 
tion which all things have under law, as distinguished from 
changes they may take on supernaturally. In both these old 
senses man is a part of nature, and in the first of them nature is 
the whole of man. 

Gradually nature, which at first had meant what man was at birth, 
(from natus, born) came to be used by some as meaning the world 
exterior to man,"^ to which the root meaning of the word nature, 
viz., birth, has no application. Whatever there be in man, which 
obtains command of the forces of exterior nature, must of course 

Joh7i Stuart Mill deS.nes v/eaiih aa "all useful or agreeable things which possess 
exchangeable value, or in other words, all useful and agreeable things except those 
which can be obtained, in the quantity desired, without labor or sacrifice." 

Jevons (" Primer," p. 13), says wealth is " what is transferable, limited in supply, and 
useful." P«?T2/ rejects the term wealth. Geo?-ge ("' Frogteaa and Poverty," pp. 34- 
37), says it is natural products modified by human exertion, so as to gratify desire. 

Henry Sidgwick (" Pol. Econ." p. 71), says: " The wealth of any individual is con- 
sidered to include all useful things— whether material things, as food, clothes, houses, 
etc., which, being at once valuable and transferable, admit of being sold at a certain 
price." 

Adam Smith again (" Wealth of Nations" by McCulloch, p. 14), says ; " Wealth, as 
Mr. Hobbes says, is power. . . . The power which that possession immediately 
and directly conveys to him is the power of purchasing a certain command over all the 
labor, or over all the produce of labor which is then in the market. The exchangeable 
value of every thing must always be precisely equal to the extent of this power which it 
conveys to its owner." 

Roscher (vol. i, chap. 1, sec. 9), says : " The possession of large, and also of poten- 
tially lasting resources; objectively such resources themselves we call wealth. But it 
mast be large in a twofold sense, large as compared with the rational wants of its pos- 
sessor, and large also as compared with the resources of other people. If all men were 
possessed of a great deal, but all of an exactly equal amount, each would be compelled 
to be his own chimney-sweep, scavenger and bootblack ; and how could any one then 
be properly called wealthy? " 

ANew York financial journal entitled Wealth adopts the following well considered 
and apt definition : " Wealth is that positive and substantial share in the good of for- 
tune which distinguishes an individual from his neighbors by putting him in possession 
of all that is commonly desired and sought after by man." 

* It is so used in the title of Mr. George P. Marsh's book, " Man and Nature," a treat- 
ise on physical geography as influenced by human action. 



44 ECONOMIC PHILOSOPHY. 

be part of man's nature. It is not, therefore, a contest between 
man and nature, but between nature in man and nature exterior 
to man. The forces which, wealth aids man to control are, per- 
haps, "the great forces of nature." But the forces, in man, which 
do the controlling, must be still greater forces in man's nature, or 
they would not control. Hence, minds educated in certain schools 
of thought, repel as ill-conceived and incongruous, the attempt, in 
a definition designed to be exact, to treat "man" as being one 
distinct entity and nature another. 

Another class of minds asks, ' ' Why do we need any aid to com- 
mand services which are rendered gratis ? " They do not merely 
ask this question, but they find themselves unable to answer it. 
This inability renders it necessary to translate Carey's language 
into the dialect in which other minds think. When it is so trans- 
lated it seems to mean that wealth is the power to obtain by exchange 
or payment such services on the part of other men as will bring 
within the reach of one's own enjoyment those properties of mat- 
ter which, though at some time or place imparted to matter gra- 
tuitously, yet can not be enjoyed by me without the services of 
my fellows. Confessedly coal, iron, wood, wheat, wool, potatoes, 
flour, and the life that is in plants, animals, and our fellow men, 
come to society at large as the gratuitous gifts of nature. The 
fragrance and flavor of tea, wine, venison or game is the gratui- 
tous gift of nature. Even the sharp flavor of the pepper with 
which we season the venison is the gratuitous gift of nature. 
This is all that we enjoy. We do not enjoy the labor the China- 
man performed in carrying the tea over the mountains on his 
back ; nor any other of the labor necessary to place the tea or 
pepper or game on our table. Yet we pay for the labor and get 
the enjoyable properties gratis. Hence in the closest analysis we 
get what we enjoy gratis, from nature, by paying our fellow men 
to bring it to us. Hence, also, what we pay for seems to form no 
part of what we enjoy, but it is the means of getting it. 

Man makes no property of matter or force which his fellow 
man can enjoy, whether it be the light of the stars, the hardness 
of ivory, the beauty of gold, the glint of the diamond or the 
warmth of fur. But men's toil makes the telescope, the paper 
knife, the coin, the solitaire, and the sacque. Hence while the 
properties we enjoy come gratis to society as a whole, they come 
to him who enjoys them, as wealth, only through his own labor or 
the labor of his fellows, and by exchange. Nature having affixed 
impassable limits to each man's power to consume, and not hav- 



FAWOETT ON WEALTH. 45 

ing presented to any man all he needs to consume, the surplus of 
one man's product must be forwarded to supply the deficiency of 
another. 

Wealth, therefore, is that power in me, however and whenever 
obtained, which gives me command through the services of my 
fellow men, which it enables me to pay for, of all those gifts or 
services, which .nature brings gratuitously to some member of 
society, at some time or place, but which only through his toil or 
that of others, is brought to me. 

Mr. Carey, however, correctly defined wealth as a power in 
man, as com^jared with Mr. Fawcett, who defines it* as a com- 
modity, and therefore a physical object. If a commodity were 
mtrinsically wealth, it would remain wealth in the same degree 
in whosesoever hands it might be. To say that it is such a com" 
modify as has exchange value is tautological, as it is the fact that 
it has exchange value which makes it a commodity. To be a 
commodity it must commode or accommodate or meet the wants 
of somebody. Tlie question whether a thing is a commodity, 
therefore, depends on whether it is wanted. But when we define 
commodity as a thing that is wanted, it is plain that the point 
that determines its being a commodity is not any quality of the 
thing itself, but the state of desire in the mind of the person who 
wants it. Want therefore stands as the antithesis of wealth, and 
wealth is the power to remove or satisfy wants. One might de- 
fine want as "the thing we desire," and the word is so used when 
we say of a book " it supplies a long-felt want." Now if we also 
define wealth as "the thing we desire," which is the outcome of 
Mr. Fawcett's definition, it will happen that wealth and want, 
while opposite in meaning, will be defined in the same terms. 
Both will mean the things we need, whereas wealth expresses the 
fact of our having them, and want the fact of our being without 
them. It is clear that the wealth and the want alike express our 
condition or attitude, either of power or of destitution. As satiety 
and hunger do not consist in " eatable food," though they do de- 
fine our attitude toward them, so wealth and poverty can not con- 
sist in exchangeable commodities, though the first implies our 
possession of them, and the latter our lack of them. Besides, 
when the true idea of wealth as a power on the part of its posses- 
sor is grasped, it becomes evident that it must be extended impar- 



*"Manual," p. 6. " Wealth may be defined to consist of every commodity which has 
exchange value." 



46 ECONOMIC PHILOSOPHY. 

tially to all kinds of power, so far as they enable us to control the 
property, services, time and destinies of our fellow men, whether 
they are exercised through the medium of physical objects or 
mental ideas or social affections, or are exchangeable or not. 

When the Chicago Tribune, in the fire of 1871, was burned so 
that not a vestige of property, unless it may have been the sub- 
scription and account books, remained — neither of which had any 
exchangeable value as commodities, the concern was still worth 
a million of dollars as indicated by the price which its shares of 
stock commanded. All this wealth was good-will, but good-will 
is not an exchangeable commodity. It could not be ti^ansf erred 
at pleasure by the Tribune to the Cincinnati Commercial or the 
Chicago Times. It pertained to the Chicago Tribune Company 
only as proprietor, and is wholly distinct from the shares of stock 
in the company, which belonged to the several shareholders, and 
were exchangeable. 

The highest elements of wealth do not always exist in a form 
in which they may thus be seen to have an economic value with- 
out being in the least exchangeable. Yet a judge's reputation for 
integrity on the bench, a clergyman's reputation for purity, a 
manager's reputation for successful enterprise, an author's repute 
as entertaining, a philosopher's fame for profound generalization, 
indeed, all modes of intellectual and social power give their pos- 
sessor a command over the services, destinies, and material com- 
modities of others, and are therefore not only wealth but capital, 
and yet are not exchangeable. Character, religious faith, moral 
influence, courage, sagacity, rank, titles, political office, a chair 
in a university as an instructor, all are wealth, but not exchange- 
able. * 

It is even conceivable that in certain conditions of society great 
wealth, or power to command services, might exist without any 
commodities whatever, and without a solitary exchange. In the 
communities of ants, bees, and beavers great social power is man- 
ifested, and in some way association and co-operation on a scale 
niuch larger numerically than is known aixiong human beings 
occurs, and yet no individual among them ever makes an exchange 
of commodities with another. 

These communities arrive at the same facility of co-operation 
without exchange that man arrives at by exchange, so perfectly 
that among the ants, according to Sir John Li^bbock, each mem- 

* This view sustained in substance by Sidgwick, " Pol. Econ.," 90. 



SOCIAL POVERTY. 47 

ber of a community of twenty thousand knows personally, and 
can distinguish evei'y other member of that community from a 
stranger of the same species. 

In a thoroughly socialistic state, like the Mormon state, and 
within eveiy socialistic order like the Catholic monastic orders, 
the Shakers, or even in the mutual co-operation of the servants 
of many great corporations, there are no exchanges, but there 
may be great power to command goods and services. 

It would be conceivable that a desjpotism like that of Egypt in 
the pyramid building period may have developed vast power in 
its ruling class over the services and goods produced by the whole 
people, and vast power to produce goods and compel services, 
without even permitting a single trade to be made between any 
two persons. In such a case great wealth might exist, but no 
commodities would be on sale. Subordination and coercion 
would perform the functions which in our commercial age are 
performed by exchange. Those, therefore, who make wealth 
consist in exchangeable commodities, grasp only a quality which 
is mcident to wealth in a commercial period ; which is partial, 
and may be evanescent. Those who define it as poiver seize upon 
the element in it which is eternal. 

19. Savage Life, Social Poverty. — Savage life is usually con- 
ceived of by people in civilization as a condition of feebler intel- 
lectual grasp, of lower cranial development, weaker moral ten- 
dencies, and more bloodthirsty social disposition, combined with 
greater animalism than that which prevails among civilized peo- 
ple. The jurist sees in. it a feebler development of law, the theolo- 
gian regards it as an erroneous manifestation of faith, or debas- 
ing consequence of superstition, the moralist recognizes its 
essential identity and parity with vice and crime as they appear 
in civilization, the educator attributes it to lack of acquaintance 
with literature and science, but the economist recognizes all sav- 
agery as arising from the utter and complete absence of wealth 
or capital, and consequent lack of organization of an industrial 
or working society. This contrast between the poverty of savage 
nations and the wealth of civilized, seems by many economists to 
be described as an incident of savage life rather than recognized as 
its essence. It sho^^ld, however, be more pointedly stated that the 
lack of wealth in its broad sense is the essence of savagery, and 
that every man would become a savage in the degree that the 
means of living in civilization were denied him. As his ability 
to maintain his wife and family in comfort slide away from under 



48 ECONOMIC PHILOSOPHY. 

him, his domestic affections are changed to coarse and brutal 
rudeness. Stripped of his clothing, the virtue of decency becomes 
impossible. Take away his bread, and to a starving man, the law 
even excuses theft, because it knows that nothing else remains. 
As Schiller says : 

Etwas muss er sein eigen nennen, 
Oder der Menschwirdinorden und brennen* 

This truth is expressed by the maxim, "Self-preservation is the 
first law of nature," meaning that no other law can restrain a 
savage from any act which he deems adapted to save himself 
either from destruction or from suffering. Desti'oy his private 
title to his home and he not only becomes a wanderer like the 
Arab, or gipsy, but almost of necessity a plunderer and thief. 
The growth of wealth, therefore, is simply the economic aspect of 
the growth of civilization.! Even the degi^ee of evolution which 

*Man must claim sometlimg as his own, 
Or he will either kill or burn. 

+ Fawcett, p. 7, says : " The most striking variations in wealth are exhibited by the 
same nation in different ages, and by different nations in the same age. There was a 
time when England was as poor as any country which is now consigned to the wander- 
ing savage, and yet she possessed then those same natural resources which now so ma- 
terially contribute not only to form but to sustain her present wealth. . . Each stage 
through which progressive nations have advanced from barbarism to civilization, is 
preserved at the present time in some parts of the globe. The savage still exists who 
lives by hunting and fishing. . . The^e great differences in wealth are partly due to 
physical causes, but they depend mainly on social circumstances, etc." 

AdamSmith says (p. 1), of savage nations : " Such nations, however, are so misera- 
bly poor that from mere want they are frequently reduced to the necessity some- 
times of destroying and sometimes of abandoning their infants, old people and those 
afflicted with lingering diseases, to be devoured by wild beasts. Among civilized and 
thriving nations, on the contrary, " etc. 

Dr. Carey in " Past, Present and Future," p. 414, says: " Civilization has in all ages 
aud countries been found where men have accumulated wealth, by means of which they 
have been enabled to subject to cultivation the rich soils of the earth ; and it has disap- 
peared as they have been forced to fly to the poor soils of the hills for safety." 
" With the division of land and ihe diffusion of wealth the power of the few tends to 
diminish . . and moral feeling improves because of the increased facility of obtaining 
the necessaries, conveniences, and comforts of life Improvement and a tendency 
toward perfect equality of moral feeling are therefore characteristics of civilization. 
With each step in this progress, jealousy and avarice disappear and woman becomes the 
companion of man and ceases to be his slave, . . parents cease to be tyrants and chil- 
dren respect and love them, and he becomes more and more animated by hope . . learns 
more and more to appreciate the comforts indicated by the good old English word 
Home, and more aud more to find in the great command to ' do unto others as he would 
that others should do unto him,' the guide of all his thoughts, his feelings and his 
actions." Again, (p. 427), he says : " The past says to the people of the present — 
civilization comes with wealth and the cultivation of the rich soils." 



SOCIALISM OF THE TRIBE. 49 

exists among savages is measured by their capital. Those which 
have no bows or arrows, slings, darts, or weapons, subsist on 
worms and bugs and vermin. Those which have these first ele- 
ments of capital, live upon fish, flesh, and fruits. Those which 
have flocks of cattle among the North American Indians are far 
in advance of those which have none. 

20. Ownership by the Tribe. — (Barbarism.) While society is 
emerging from the savage state all ownership of property is in 
the tribe and assei'ts itself at first about equally as to persons, per- 
sonal property and land ; i.e., at first each person is owned by his 
gens, clan or tribe, which claims his services, communally and 
socially, to the extent that it needs them. There may be a condi- 
tion anterior to this, of absolute anarchy, or absence of all govern- 
ment and of all property, where no person belongs to or knows of 
any tribe or clan, and no rights are asserted. The native Austi^al- 
ians are alleged to be of this low type, without tribe, property, 
or title. Each man is — 

" Only a pauper whom nobody owns." 

Savage life generally, however, is tribal, and recognizes the 
tribe as owning in common for all its members, both goods and 
land. This socialistic ownership does not arise from generosity, 
for such a feeling hardly exists, but from the consciousness that 
nothing weaker than the aggregate strength of the ti'ibe can 
secure, or assert, or protect a title to any thing. Freedom has not 
yet developed to the point where an individual can own any thing, 
because brute force has not yet given place to law in the degree 
required before a private person can defend or sustain ownership 
in any thing, or court of law can exist. Roscher (Polit. Econ. 
vol. i, sec. Ixxxiii,) declares that "in all the lower stages of 
civilization, a community of goods exists. Out of this condition 
private property is evolved only as well-being and culture have 
been evolved, private property being at once the cause and effect 
of such well-being." 

The North American Indians own all lands only as tribes. To 
fence lands, for private ownership, is to them a dangerous mon- 
opoly, fatal to the business of hunting and fishing. At first, under 

Wolowski (Introductioa to American Edition of Roscher's Pol. Econ., p. 20.) says : 
" The increase of production then appears as an instrument of elevation in the moral 
order. It is energy of soul, intelligence and manly virtue which constitute the chief 
source of the wealth of nations ; which create it, develop it and preserve it. Wealth 
increases, declines and disappears with the increase, decline and disappearance of these 
noble attributes of the soul." 



60 ECONOMIC PHILOSOPHY. , 

the Roman law, all private appropriation of land on rivers and 
coasts was subject to the anterior rights of fishermen to take so 
much land as they needed for cleaning fish and mending and dry- 
ing their nets. But, in the United States, the fisherman's right has 
become subordinate to the private right of the adjoining owner. 
Roscher (above cited) says : ' ' Diodorus describes community of 
goods and of women as existing among the Ichthyophages on the 
Red Sea, who lived in caves, went naked for the most pai't, plun- 
dered all shipwrecked people, and never reached an advanced 
age. " Strabo says the same of the Scythians, Plutarch of the 
early Spaniards, Dio Cassius of the Rhetians, Isocrates of the Tri- 
balli. The Caribs also had community of goods, ijerformed all 
their work in common, ate at a common table and had common 
stores and supplies. (Petr. Martyr, Dec.vii, 1; Rochefort, ii, c. 16.) 
Among the Kuskowimers of Russian America, all the able-bodied 
men of the tribe live together, {v. Wrangell, Nachrichten, 129.) 
Among the inhabitants of the Aleutian Islands, in times of 
scarcity of food, the product of the fisheries is divided according 
to their need. 

" The hospitality of the inhabitants of the Friendly Islands bor- 
ders on community of goods. {Mariner, Freundschaftsinseln, 75, 
81.) So also among the Eskimaux. In Mexico the Spaniards 
found land ownershij) among the most distinguished of the 
natives, but only a species of possession in common and common 
storehouses among the peasantry. (Robertson, " Hist, of North 
America. ") In Peru they found an advance on mere village or 
tribal communism, viz., state socialism — a partial community of 
goods presided over by the state ; a yearly division of all lands 
among the people in proportion to their rank ; the cultivation of 
these lands in common, under the superintendence of the state 
and to the sound of music. Both Peru and Mexico, however, were 
relatively poor. Peru had only one city, no beasts of burden, no 
plows, no trades, no commerce. In Mexico the farming was so 
slender that the advance of the little arm 3^ of Cortez produced a 
famine. 

The Spartans under the constitution of Lycurgus had commu- 
nity of goods, meals in common, public education, the authorization 
of stealing, the prohibition of trade, of the precious metals and of 
fine furniture, the equal division of property, land made inaliena- 
ble, etc. The Tcherkesses of Circassia consider robbery honorable 
provided the robber is not caught in the act. (Bell, Journal, etc.) 
Similar notions prevailed in ancient Egypt relative to their or- 



., TBANSIUNT TITLE. 61 

ganized robber bands, which were sociahstic withm and predatory 
without. (Diodor., 180.) 
21. Tribal Ownership Depends on Occupancy and 

Use. — In this early period of socialism or communal ownership 
of land, so far as private right to land begins to exist at all, it 
usually depends on its private possessor improving, tilling or 
occupying it. The United States have usually made occupation 
and residence on government lands by a settler a condition to his 
gaining title. All systems of law give preference to an occupant 
over one having no title, as is indicated by the familiar maxim, 
" possession is nine points in the law." " Mining titles in Califor- 
nia and Australia rest on possession, and are lost in a brief time if 
the mines are not worked ; so Roscher says ( Political Economy, 
sec. Ixxxviii): "This is the practice in Taway {iiitter)\ and also in 
ancient Germany {Grimm). Right of the ' dead fire ' in Spain 
and Portugal during the middle ages {S. Rosa de Viterbo). In 
many parts of Persia, the land belongs to any one who has pro- 
vided it with water by canals or wells. (Fraser, Journey in 
Chorasan, ch. 7.) Especially after the Mongolian devastation 
about the beginning of the fourteenth century, it was decreed that 
land that had remained uncultivated for a long time should be- 
long to the pei'son who made it productive. (d^Ohsson, "Hist. 
desMongols," iv, 41S.) In the time of the ancient Persians (Poly b,, 
X., 28.3) the harvest for the first five years belonged to the person 
who first irrigated the land. On the Upper Euphrates likewise 
the land is very often neither sold nor leased. Any one who will 
till it and pay one-tenth of the produce to the bey may have it 
for nothing. {Ritter, x, 669.) So, too, among the Fulah and 
Mandingo negroes, and even among the Tscherkessans (Klemm 
"Kulturgeschichte," iii, 337). Theodosius and Valentinian de- 
creed that deserted fields should after two years cultivation belong 
to the possessor (L. S. Cod. Just., xi, 58)." 

22. — Tribal Precedes State Ownership. — In Europe, and 
especially in England, rights to the forests, to pastures, to gather 
turf, and to take fish remained in coramon long after the arable 
land had become private. Upward of two thousand acts of par- 
liament were passed for converting the land, that had been com- 
mons, into private titles by inclosure, and such acts were deemed 
necessary to admit of the cultivation essential to a more dense 
population. In Gei'many the change covered the first half of the 
present century. In Russia the communal ownership still applies 
to the greater part of the lands. In Congo and on the Gold 



52 ECONOMIC PniLOSOPHY. 

Coast of Guinea, says Roscher, ' ' the land in whole villages is tilled 
in common, and the harvest distributed among the families per 
capita. Wherever absolutism reigns, the prince is also the owner, 
(in his capacity as prince) of all the lands. {Klemm, iii, 337.) 
In China, where the original tenure in common of the land by 
all was broken through in the third centujy before Clirist, all 
the land of the country now belongs, strictly speaking, to the 
state, and the possessor of land who permits it to go untilled is 
punished. (Plath, in the Phil. Hist. Sitzungsberichten der Mun- 
chener Akad, 1873, 793 flf.) In Corea, piivate property in land is 
unknown. Arable land is divided by the state according to the 
number in a family. {Hitter, vi, 633.) The example on the 
largest scale of a country without private property in land is the 
British East Indies. (Ch. Campbell, System of Land Tenure in 
Various Countries, Cobden Club Essay) . " But when law has 
become so far developed as to protect private ownership in land, 
the communal has never been preferred to the private, by any 
race or people, on the ground of its greater productiveness, or 
more equal diffusion of comfort. 

23. Charitable and Religious Coinmunism. — In a few 
instances persons actuated largely by a religious or social enthu- 
siasm have preferred the communal to the private system, but it 
has seldom been claimed to be preferable by pei'sons seeking only 
to better their material condition. Those who have reached back- 
ward toward the communal system have usually been persons 
who had seen little of its working, but whose moral feelings were 
shocked by the inequalities and hardships incident to the strug- 
gle for subsistence under the system of individual property, 
which is necessarily that of free competition, softened by social 
and state aid to those who fail. The community of goods of the 
first Christians at Jerusalem (James i, 1) was recommended as a 
scheme of charity, and not as an economic scheme of production 
— an act of love, but not a right which the destitute could assert 
(Acts v,4), and it extended to the use only and not to the ownership. 
(Acts iv, 32.) " Spite of all this, " says Roscher ( Political Economy, 
sec. Ixxxi), "it produced a chronic state of povei'ty in the church 
at Jerusalem, which Paul had to meet with collections taken uj) 
on all sides, without, however, anywhere establishing a similar 
institution. (Romans xv, 26; 1 Corinth, i, 16.) Among the 
Christian fathers many like Chrysostom and Clemens recommend- 
ed community of goods on economic groiinds. Three centuries of 
the experiment demonstrated, howevei*, in Judea, Greece, Alex- 



SOCIAL MOTIVES WEAK. 53 

andria, Spain, and Italy, that tlie more expert the pleadings of the 
church became for the means to provide for the poor, the more 
intense became the poverty against which they were everywhere 
powerless to provide. Community of goods, cattle and land was 
practiced among the first settlei's in New Haven, Massachusetts 
Bay and Pennsylvania {Roscher, id.), and Virginia, but Bancroft 
says (1 History United States, 16), as much work was performed in 
a day after the system was abandoned as was done under it in a 
week, and as much by three workmen as previously by thirty. 
The Catholic Church, in its priesthood and order's, owns its j)rop- 
erty as a commune, though the governnaent of the commune is 
monai'chical. It is the most numerous and wealthy socialistic- 
organization in Christendom, and proves that socialism in owner- 
ship does not imply equalitj'' of individuals in control. 

24. Relative Inrtucenient to Effort under both Sys- 
tems. — The difference in the strength of the two systems, social 
and individual ownership, as stimulants to endeavor, may be seen 
at once in the family. A family exhibits the social system, and 
admits the right of each of its members to all he needs for his 
welfare. Every child knows that it costs to maintain him from 
one to two dollars per day, but this would not incite him to special 
effort, because he feels that, whatever is the cost of his sup- 
port, he is entitled to it, and it will come, whether he puts forth 
any effort or not. 

When, thei-efore, a parent wishes to urge his child to special 
effort, he makes no account of the dollar or two he daily expends 
in the child's ordinary support, but promises him as wages per- 
haps a quarter of a dollar, and is sure of his child's utmost effort. 
A small wage, earned with the feeling that it is our own, and that 
we have free choice whether to earn it or not, is more stimulating 
than a large dividend guaranteed on socialistic pi'inciples, whether 
it be issued on the basis of general merit, need or past services. 

Among barbarous races all ownership is tribal, and not in- 
dividual, the tribe being in this stage of development the only 
power strong enough to protect and defend a title. Private own- 
ership only evolves as law, and juridical or law- derived notions 
of right and wrong become sufficiently strong to protect a title 
in the individual. 

25. Wealth Dependent on Exchange. — How Far. — 
Wealth exists long befoi'e exchange exists. Indeed, a very con- 
sidei'able organization of labor by force or slavery might endure 
.for a long period without exchange, the central despot or social 



54 ECONOMIC PHILOSOPHY. 

governors regulating by orders what each subject should do and 
receive, and the latter accepting such dictation as the substitute 
for the present mode of inducing labor by money. Within the 
family, and indeed within all organized gens, communes, com- 
munities, armies, corporations, tribes, or clans which practice 
community of land, goods, or services, the aggregated will or exec- 
utive judgment of the chief becomes a substitute for wages and for 
exchange, in the sense that each member of the community renders 
many services to the other without payment in any other form 
than as he profits by the success of the commune, tribe or clan. 
If we should conceive of an entire nation as being organized in this 
way, and if the experiment were successful in that it provided 
for the wants of all as successfully as the present system, it is 
evident the wealth would be as great as it is now, since all Avould 
command in an equal degx^ee the services of others, but no ex- 
changes would occur, and the distribution'of wealth would take 
place on a basis of agreed ratios or, in effect, of rank. No values 
would exist, as none now exist within the family, and nothing 
would have exchangeable value. In the government post-office, 
for instance, the earnings of the aggregate force are expressed by 
the aggregate sum received for postages, which is distributed ac- 
cording to the salary schedule. But neither member of the foi'ce 
earns any thing save as he is assisted by the others, since no one 
carries a letter to its destination. There is therefore great co- 
operation in labor to the same end, but no economic exchange of 
services. As the only function of wealth is to induce co-operation 
in rendering services, and as this may be done by authority, slavery, 
rank, affection or socialism without exchange and without the 
element of value being the basis of co-operation, we can not agree 
with the many who hold that wealth consists only of exchange- 
able values, nor with the socialists who imagine it would improve 
present conditions to return to the tribe. Wealth, however, may 
consist of that very power over the services of others, obtained 
through chieftainship or official place, which employs and com- 
mands all without performing any act of exchange whatever. It 
can, perhaps, be said that with the growth of civilization private 
wealth comes more and more by exchange, and less and less by 
force, authority or compulsion, or by rank which is the outcome 
and consequence of these. 

26. Private or Individual, Including Corporate 
Wealth. — Persons who compare America with Europe ob- 
serve that in the foi'mer the individual is more — tlie govern- 



PRIVATE WEALTH. 55 

ment is less. In the latter only the government, or those closely 
identified, with it either as state or church, show wealth. In 
America wealth characterizes the home and the person. In 
Europe it marks a palace or the dignitary. But in Europe in mod- 
ern times the diffusion is greater than anciently, or than now in 
most parts of Asia. As civilization ad vances wealth vests more 
in the individual. It takes the form of habitations which are 
not mere places of shelter, but edifices erected with a view to 
architectural style, artistic effect, and extended hospitality. They 
are surrounded by imposing parks and grounds, and conservatories 
for the cultivation of rare plants and flowers. They become schools 
for the manifestation of the esthetic sense. Inside the rooms are 
made suggestive of travel and mental range by souvenirs and hric- 
a-brac, by paintings, engravings, frescoes, and diversified and 
durable furniture. Music, literature, and art elevate the tone, by 
enlarging the possibilities of enjoyment, in these homes, and the 
extent and diversity of the tastes to which they minister. 

In America also, where private wealth has reached a degree of 
development never before or elsewhere known, the shops of trade 
and manufactoi'les of goods, the great office buildings for rental and 
hotels for the accommodation of guests, as well as railway cars 
for their transportation, become indices of individual wealth ap- 
plied to social or industrial uses. They overtop, in luxurious 
appointments, those expenditures for the purpose of indicating 
rank or sovereignty, which in earlier periods or in countries of less 
'rapid growth in private wealth, have been possible only to the 
state. The growth of private and personal wealth is the economic 
aspect of the increase of private and personal freedom, of private 
and personal intelligence, independence of thought and the free 
and untrammeled exercise of private judgment. In proportion 
to the number who attain this condition the coercive function of 
the state disappears and, in a certain sense, it may be said that 
the number of those who could do without the state increases. 
The state, meanwhile, adapts itself to these new conditions by 
diminishing its coercive, and enlarging its attractive and instruc- 
tive, functions. Its armies lessen as its schools increase. Its 
navies decline as its industries multiply. It builds fewer gibbets 
but sends out more committees of investigation into the economic 
causes of suffering. It prizes wealth itself less and life and man 
more. It punishes fewer crimes with death and studies and de- 
bates whether society has not in some way erred toward the pau- 
per and the felon. Every cause which is believed to stand iden- 



56 ECONOMIC PHILOSOPHY. 

tified with a larger altruism and truer benevolence is sure of effi- 
cient revenue from tlie spontaneous offering of a more than satis- 
fied egoism. Hence, in countries where there is a large diffusion 
of individual and private wealth, the effective organization of 
charities becomes a means of revenue to their originators and con- 
ductors, so sure and ample that the most vigilant measures are 
requned to prevent the mercenary from resorting to schemes of 
philanthropy as affording a larger profit than those of productive 
industries. 

The combination of individuals in capitalized corporations adds 
to the power which wealth possesses in the hands of a private per- 
son, the immense advantages of perjjetuity, a government of checks 
and balances, a deliberative council for the guidance of enter- 
prises, and an executive headship selected with refei'ence to skill 
and personal capacity for command in industry. Freedom from 
a part of the personal risk on the part of the corporation has also 
had its influence in promoting the tendency to jjlace all complex 
and influential industries in the control of corporations. From 
these, and other causes, from two-thirds to three-fourths of the in- 
dividual wealth, productively employed by the people of the 
more advanced nations, is managed by corporate companies. 
This intensifies its activity as compared with its control by indi- 
viduals in a degree as great as that which accompanied its earlier 
transition from communal to private property. The corporation 
is by as much a more intensive productive agent than the indi- 
vidual, as the individual is more productive than the commune.*' 
The individual has many whims and caprices to gratify besides 
the sense of profit or the specific end, whatever it may be, of 
corporation. He seeks wealth and profit more singly and 
absorbingly than the commune, but less assiduously than the 
corporation. The corporation can be held absolutely to its one 
purpose night and day, year in and out, without caprice, diversion, 
amusement, or dissolution. In productive uses it supplants and 
survives in competition with the individual, for the same reasons 
that the individual supplants the commune. A higher and finer 
stage of law is essential to corporate ownership than to individual. 
But, given the stage of legal protection adequate to render its ex- 
istence possible, it supersedes the individual whenever enei'gy, 
skill, and power are conditions of success. Corporate wealth, 
therefore, is, in its title, the most intensified and subtle form of 
individual wealth, and that which carries private right over pro- 
ductive property to its highest stage of dominion. Throvigh the 



PUBLIC WEALTH. 57 

corporation an individual may securely invest in business and 
industries of which he has almost no knowledge, and may thus 
give effective aid to many enterprises without the labor of master- 
ing their details. At the same time, through the ordinary secur- 
ity he feels in that judgment of chai'acter which all men practice, 
he can exercise his just share of influence over the managers of 
these great trusts, and so may still invest wisely, where if it were 
an individual instead of a corporate enterprise, he would be in- 
vesting ignorantly. 

While corporations pursue wealth more singly than individu- 
als, they are also permitted by their longer tenure and divided 
risk to pursue it more patiently as to time, with a smaller 
need of clutching immediate returns, and more broadly as to 
means where that which is to-day a means of sowing may be in 
the future a means of reaping. Hence, on the whole, corpora- 
tions, while more single in their devotion to gain than individu- 
als, are also frequently more generous in their methods, more 
peaceful, more dispassionate, and less despotic in the exercise of 
authority. 

27. The Comnioiiwealtli.— In the advance towai'd civiliza- 
tion the wealth that is common to the whole state, and ordinarily 
not exchangeable, increases absolutely, though it declines rela- 
tively to that of individuals. Public roads, rivers, canals, seas 
and bays, navies, fortresses, custom-houses, public schools, court- 
houses, prisons, jails, hospitals, poor-houses, work-houses, libra- 
Vies, parks, streets, canals, markets, docks, light-houses, capitols, 
pavements, sidewalks, se"^7ers, gas fixtures and sometimes the 
works for gas manufacture, treasuries, mints, mines and lands are 
a foi'midable fund of common wealth whose power does not lie in 
its exchangeable value. In monarchical countries the royal pai'ks 
and palaces and crown lands, pictures and jewels, and in coun- 
tries having an established state religion, the churches and mon- 
asteries are state property. 

Society has two concurrent forms, the state life and private 
life. The former is socialist, i. e. , in all that concerns state life 
the state is regarded as controlling the individual. The latter is 
individualist, and within this sphere the individual is left, at least 
for the present, uncontrolled by thQ state. 

It would not be doubted that a very great revolution must 
occur in human thought before it would be regarded as within 
the province of the enlightened state to detei'mine whether, and 
whom and at what age, a man should marry, what should be his 



58 ECONOMIC PHILOSOPHY. 

course of diet as to food and drinks, apart from intoxicating 
stimulants or poisons, what should be his style or cost of cloth- 
ing or its materials, where he should reside, or how much prop- 
erty he should be permitted to accumulate, what should be his 
occupation, or how much he should be permitted to charge or 
receive for his services or commodities, or how many children he 
might have, or how much property he must have before having 
any children, or how, short of the use of undue violence, he shall 
maintain the order of his household, and many similar things. 
Each of these points has, however, been made the subject of exte- 
rior social regulation, either by the state or by the governing 
power, in communities formed on the socialist basis. 

In the modern state, the citizen is not in practice subordinate to 
the commonwealth in all things, but has reserved rights which it 
is one of the functions of the commonwealth to respect. By this 
it is not meant to assert that the commonwealth might not in the 
course of its evolution change into one of a different sort, Avhich 
might oust him of these supposed reserved rights. But this con- 
tingency is remote. Nor is it meant that there is any legal limi- 
tation on the powers of the commonwealth in these cases, but 
only a consensus in behalf of the inexpediency of its exercise. 

The right of the state to the unlimited service of the citizen in 
war, and the right of the state through its sheriff and county offi- 
cers to call upon the posse comitatus or power of the citizens of 
the county generally to aid him in executing process, are surviv- 
ing relics of state socialism, as to the person. The exercise of the 
power of eminent domain, or the right to take private property 
for public use — as for forts, for the supply of an army in war, for 
all public buildings, roads or ways, is also an assertion of state 
socialism as to property. The collection of debts, the punishment of 
slanders, assaults and crimes, and the compulsion of persons by 
law to perform certain duties toward others, as of parties to per- 
form contracts, of parents to support or educate their children, or 
husbands to support their wives, and the exercise by the state of 
superintendence over marriage and of the power to grant divorces 
is an assertion of state socialism as to the conscience. The sup- 
port of the poor and of convicts by enforced taxation, and in 
return the power exercised by the state to hold paupers and con- 
victs in enforced labor or state slavery, are the contuiuance of 
state socialism in those respects. The tribal relation, as it 
exists among savages, lies folded up and dormant, as it were, 
within the civilized state, ready to restore savageism, commu- 



RESTORING SOCIALISM. 59 

nism, anarchy and slavery, in the form of prisons, jails and work- 
houses, gallows, transportation and colonization among savages, 
to all whose conduct exhibits that they are still in the savage 
state. 

Crime constitutes such an exhibition. It matters not that 
crime results from destitution or incapacity to accept the 
• restraints of civilization. The criminal by his crime expresses 
his preference for the tribal relation, and by his punishment he is 
remitted back to that which he prefers. To steal is equivalent to 
saying: "I would that all property were held in common," 
which is the tribal condition. To be arrested and have his arms 
pinioned is to come under the brute dominion of the strong, which 
is also the tribal condition To commit rape or burglary, arson 
or murder is to say : " I prefer the savage life to the civilized." 
To seize and punish, shoot or hang the ravisher, burglar, incen- 
diary or murderer is to say : ' ' Society meets you on the plane that 
you prefer, that of brute force." It can not be said that these 
brute punishments are either very deterrent from crime or very 
reformatory to the criminal. But they are extremely logical. 

Equally logical, and far more reformatory to the criminal, is the 
system of colonization of criminals in new countries. In Job the 
transportation of criminals is mentioned. In Rome deportation 
to an island was so familiar, that a law was passed to limit it to 
cases in which a trial in comitia had occurred, which by transla- 
tion into Magna Charta became the origin of our trial by jury. 
All European countries, during the period in which they had 
charge of the colonization of the new world, used tlje latter as a 
place of banishment for their criminals. England continued the 
custom to a late date in Australia, and with marked success as a 
means of reform. Assuming that crime as well as pauperism 
indicate that inaptness and unfitness for the restraints, complexi- 
ties and intensity of industry which distinguish civilized life, the 
natural remedy would be to remove the criminal or pauper to an 
environment where greater indolence of life and laxity of morals 
would be tolerated and where the conditions of life would be sim- 
pler and existence would involve less toil. This is done by depor- 
tation to savage lands where the climate is not severe and where the 
soil is good. Among savages, and compared with them, one who 
would be, in civilization, a criminal or an anarchist, would be likely 
to be changed into an advocate of government, law and virtue. 

Criminals in our penitentiaries, and the poor in workhouses, 
are treated to far better and more abundant fare than is usually 



60 ECONOMIC PHILOSOPHY. 

secured by savages in the hunter state. The savage obtains his food 
with great irregularity, sometimes having little or none for several 
days and at other times eating at one repast what a civilized man 
would divide between thi'ee. Convicts and felons are more regu- 
larly and wholesomely fed, are infinitely better housed, clad, 
instructed and are in a condition of greater security from danger, 
less liability to bodily harm, and of kinder general treatment 
even from the most unfit or cruel keepers than savages usually 
award to each other. Notwithstanding the natural indolence of 
the savage and the fact that he works only under the immediate 
pressure of danger or hunger, such is the constancy of both dan- 
ger and hunger that it is doubtful if tlae average savage does not 
work more contuiuously and severely than the average convict 
or pauper. 

Under whatever system employed it is a work of great diffi- 
culty and requiring rare skill in management to render either con- 
victs or paupers self-supporting. Of all the prisons in the United 
States only four or five attain this result. The cost of support of 
the prisoners averages about forty cents a day, after prisons and 
other conveniences are built and machinery provided. The sys- 
tem of letting their labor by contract to manufacturers who can 
use unskilled labor is probably the more usually economical, 
while that of introducing w^orkshops and selling the products is 
more educating and reforming.- 

28. The Family, and its Wealth. — In the earlier stages of 
society the family relation merges into that of the tribe and both 
merge into ^lat of slavery. All three contain in so nearly a like 
ratio the elements of communism, socialism and anarchy, together 
with the gerras of government, that writers have been prone to 
find the origin of all government at times in the Patriarch, at 
others in the chief, and again in the great owner of men-servants 
and maid-servants, flocks and herds. The three are not generi- 
cally distinct. Under the Roman law the power of an owner 
applied to the father over his children, male and female, luitil he 
died. A Roman citizen, in the absence of a direct act of manumis- 
sion, would still, with his household and goods, be the property 
of his father in theory, even though he might have risen 
to the highest offices in the state, or might be in command of 
armies. The husband owned his wife in as complete a sense 
as he owned his slave. Every family, including children, slaves, 
goods and persons who had come into it by marriage or adoption 
had its paterfamilias, who was its executive head or chief, enti- 



POSITION OF WOMEN. 61 

tied to its service and invested with power to enforce obedience. 
It was a sort of corporation to which i\\Q paterfamilias was both 
president and board of directors. 

In an age like this when money is the basis of almost the entire 
work of creating- and distributing wealth, when every smallest 
service is paid for in cash, and when even families are often dis- 
solved if the supply of money fails, and its members will attach 
themselves to some new protector who has more money, it is diffi- 
cult to conceive of the part played by the family, as well as by the 
tribe or gens, under the Eoraan state, as the substitute for money 
and the organizer of industry. The gens differed only from the 
family in being a collection of families supposed to be descended 
from common ancestors, and to have the same household goods 
or ancestral worship. Often the gens partook of the industrial 
unity and despotism which belonged to the family. The principle 
of subordination to authority, and affection for the family name 
and headship, produced an effective organization, both for war 
or for politics, and for industry. 

Among the Greeks, on the other hand, there was but little cohe- 
rency to the family. Among the Spartans woman's rights and 
the ownership of property by women prevailed so extensively 
that Aristotle declared that women owned a third of the land in 
Lacedemon. Throughout Homer great individuality, independ- 
ence and wisdom is shown by the women. The Jewish women 
occupied a medium position, less free than among the Greeks, less 
enslaved than among the Romans. Among the Teutonic races 
women were more laborious than among the Greeks, but hardly 
less free. 

Subjection of the women to the men is not an invariable though 
a usual characteristic of savage life. Among tlie North Amer- 
ican Indians it is severe, but among many of the Africans of the 
Soudan and the Congo the women are the merchants and traders 
and necessarily more free. The degree in which the family is 
conspicuous in the ownership of wealth, as distiuguished from the 
individual, varies widely according to a race principle the causes 
of which are lost in the mazes of race development. Some birds 
return and rebuild every year in the same spot after migrating to 
a home several thousand miles distant, thus manifesting a senti- 
ment of property in tlie family. Seals also have a strong sense of 
property in particukir localities. 

The influence of the Roman idea of the family, contending 
against the Greek and Saxon idea, has been felt throughout 



62 ECONOMIC PHILOSOPHY. 

Europe and America. At times the tendency to give stability to 
the family as the unit of society has caused the laws to lean 
toward entail, primogeniture and inheritance, securing the estate 
in the wife and children beyond the power of the temporary 
head of the family to convey, squander or dissipate. This is seen 
m the homestead laws, particularly in the Western States, in which 
the homestead, however valuable in some states, is exempt from 
execution and must be conveyed with peculiar care relative to 
the rights of wife and child. 

It is sometimes asserted that the family and not the individ- 
ual is the unit on which the state rests. It is on this principle 
alone that political rights and duties, such as military service, 
police service, fire service, service on the posse comitatus, on 
juries and in office, together with voting are cast upon adult 
males as distinguished from both women and infants. 

The family relation is the most powerful of all incentives to 
industry, and closely connected with it is the desire to transmit 
property to, and provide for one's childi-en. An intimate rela- 
tion exists in history between the degree in which the integrity 
of the family is preserved and the durability of the state. Where 
the family tie is feeble, as among the Greeks and Jews ajid all 
nomadic tribes, and family authority is not made continuous 
through several generations, by transmitted wealth and inherited 
station, the people do not differentiate into cultured classes on the 
one hand and laborious classes on the other, nor do they greatly 
differentiate in their occupations. In such a condition, the state is 
transitox-y and revolutions frequent. Rome, which endured as a 
government for 1000 years, and Great Britain, which is in many 
things the successor of the Roman Empire in the modern world, 
find in the continuity they give the family, through the heredit- 
ary transmission of wealth, one of the chief causes of their greater 
stability and permanency as states. 

In the vegetable world the grass which dies down to its roots 
with each succeeding year does not give rise to timber for great 
structures. So in the social Avorld the family system which per- 
mits each generation to inherit nothing of the success, means, cul- 
ture and gentility of its i^redecessor, will render the state perish- 
able as the grass. It is moreover worse than in vain to bring into 
the world a generation of young men and young women tenderly 
reared and accustomed to the security and refinement, leisvire for 
mental improvement and tlie cultivation of forecast and the 
habit of command, order and methodical management which 



HiaimB Monvm. 63 

come with the early possession of ample means, if at the death of 
every parent these means are to be confiscated and the child is to 
be thrown upon a condition of physical toil for which he is less fit 
than he would be to direct the industry of others. 

Experience proves that families have a continuous identity 
through generations. Many families manifest as closely the same 
inlierited characteristics through centuries of varied experiences, 
as a ]Derson would at different periods in the same life. This family 
life shows itself in some instances in successive generations 
of honoi'able preferment ; in others in a long succession of legal 
or forensic skill ; another will be full of inventors. One will fol- 
low the sea, one will consist of great farmers, and another will 
turn out generation after generation devoted to art, theology or 
learning. In America, where the republican spirit is strong, 
great jjains are taken by law to equalize men, as to their start in 
life, and their, legal rights to the end of the race. Hereditary 
merit and social skill, however, not only assert themselves in indi- 
vidual cases but are transmitted along with their result in fami- 
lies. No ranks and titles exist, but the achievements and suc- 
cesses of each are none the less recognized by its members and by 
society, and constitute an element of transmitted power, contin- 
uous from one generation to another. 

29. Social and Spiritual Wealth. — The evolution of soci- 
ety from barbarism toward civilization, like that of the individ- 
ual from poverty toward wealth, if well rounded and harmonious, 
will be marked by a decline of the primary motives in human 
conduct, or the vital passions, and a rise of the secondary motives 
or those which are only indirectly and remotely connected with 
existence. It is usual to style the latter the higher, and the for- 
mer the lower, parts of our emotional nature. The appetite for 
food, the desire for shelter of some sort, the passion for sexual 
association, and the determination to defend the spot of ground 
one has selected for his den or lair, are qualities which man shares 
with all the higher brutes. But the love of effecting useful 
results through industry, the passion to be deemed truthful, 
prompt, kind, observing, faithful, systematic, sagacious, coura- 
geous, enterprising, learned or thorough, are all passions which 
are only indirectly connected with the struggle for existence. In 
the degree that they develop, life is ennobled and dignified, 
made chai'ming and attractive to others, and living becomes a fine 
ai't to him who lives. 

Labor and production also become a source of enjoyment when 



64 ECONOMIC PHILOSOPHY. 

the processes connected with them are elevated into an art which 
gratifies the taste apart from the service it renders to others or 
the gain it brings to ourselves. In the degree that society 
advances toward civilization and occupations multiply and each 
is pursued with the skill of an artist and a specialist, the propor- 
tion of those who labor passionately and for love of their occupa- 
tions increases relatively to the number of those whose struggle 
is simply an animal one for subsistence. 

Thus a wide range of occupations opens up in which reputation, 
fame, social distinction, are pursued as ends. Others in which 
altruism or the common good is the motive. In others the good 
of a special class is looked after. The public teacher and critic of 
life and of morals, whether he be in the pulpit, the editor's chair, 
or in the presidency of a college, draws around himself a new 
form of social wealth in the circle of pupils to whom he imparts 
instruction, a form of wealth, which he could not afford to 
exchange for blocks or stocks.* Each is the Plato of his own 
academy — the autocrat of his own breakfast table. The artist has 
his circle of patrons, whose interest in his works, thougli merely 
an intellectual and aesthetic attraction, is more valuable and con- 
genial to him than a baronial castle surrounded by acres of land 
tenanted by a dull peasantry, atid furnishes the artist with a sup- 
port as generous, a circle of friends as wide, and associations as 
agreeable, as those enjoyed by the baron. Thus social wealth 
embraces all those sources of attraction among men arising out of 
politics, war, scholarship, enterprise in industry, art, authorship, 
science, religion, philosophy, and all those soui^ces of attraction 
among women arising in personal charms, conversational accom- 
plishment, wit, social prestige and rivalry, grace, taste, tact, and 
the entire repertoire of means whereby happiness is maximized 
through social contact. Material wealth reaches its ultimate 
function and utility when it aids in furnishing the accessories 
and aids whereby social wealth can thus manifest itself. Matei'ial 
wealth may build its dining-hall, purchase the viands, and spread 
the feast ; but unless the guests bring with them the elements 
of social wealth, intellect, wit, wisdom, the fame of public utility, 
virtue and beneficence, tact, courtesy, kindness, and culture, the 

* i?o«c/ier (" Political Economy," book i, chap. 1, p. 138,) enumerates six varieties 
of economic labor, the last of which is : /. Services, in the more limited sense of the 
term, which embrace personal as well as incorporeal goods ; as, for instance, the 
labors of the doctor, teacher, virtuoso, of the statesman, .judjje, and of preachers, 
whose office it is by way of eminence to produce and preserve the immaterial wealth 
known as the Slate and the Church. 



EIGH AND POOR NATIONS. 65 

outlay of material wealth fails. It is iu exchanges of social 
wealth that man attains his highest happiness. Social wealth 
includes, thei'efore, all the means, spiritual, intellectual, moral, 
and physical, whei^eby man is brought into pleasurable association 
with his fellow-men. 

30. The Wealth of Nations. — Certain nations are rich 
relatively to others, as individuals are. Certain nations pass 
through successive periods of poverty and riches. Some are rich 
in one or two aspects, as in area, mines, fertility, government 
revenues, manufactures or the like, and lacking in others. Early 
writers on political economy, especially of the mercantile or 
international school, taught that the foremost object of the science 
was to teach the means by which one nation might enrich itself 
relatively to others. Stress was laid upon colonial possessions, 
mines, shipping, large importations of coin, or exports of manu- 
factures, or growth of foreign commerce. Of late political 
economy has tended more to become social economy than inter- 
national economy. It has been occupied more in studying the 
relation of classes to each other, such as in England, the land- 
lords, the farmers and the laborers, or the manufacturers and the 
employes. It can not be said that the relations of nations to each 
other, or the means by which they may impoverish others 
or enrich themselves, or vice versa, has ceased to be a topic 
among economists, whether practical or theoretical. Mr. 
Bourne's recent essays on the ' ' Dependence of England upon 
Foreign Countries for Food," are as anxious a discussion of inter- 
national gain and loss by a foreign trade in food, as Mr. Mun's 
" England's Treasure in Foreign Trade" of two centuries ago, 
only Mr. Bourne is not so cei'tain as Mr. Mun was that the for- 
eign trade is so great a treasure, relatively to the domestic. 

Difference in relative national wealth may appear in diflPerence 
in the capacity to put a fighting force in the held for defense, in 
diffei^ence in annual production and consumption, difference in 
the standard of living, as to the average quality of the habita- 
tions, clothing and food in use among the people, difference in 
accumulations of fixed capital, machinery, implements, and 
buildings, difference in the relative abundance of gold and silver 
in circulation as money, and in the abundance, stability and 
security of the paper money in circulation, and the degree in 
which it is safely substituted for coin ; the difference in the rela- 
tive development of science, literature, art, luxury and leisure — 
but all these differences are likely to be measured with tolerable 



6d ECONOMIC PHILOBOPSY. 

fairness by a diflFerence of income per capita as measured in 
money and in necessaries of life. The two hundi'ed millions who 
inhabit British India are computed by the late minister, Sir 
Evelyn Baring, to have an average annual income of twenty- 
seven ruj)ees (£2 14s.) per head. The thirty -six millions of people 
inhabiting the United Kingdom of Great Britain and Ireland 
have an average income of £35 per head. The former earn 
five hundred and forty millions of pounds sterling per year ; the 
latter, though only one-sixth as many in number, earn twelve 
hundred and fifty millions sterling per year. Assuming that the 
British Kingdom is two and a half times stronger than the 
country it has conquered, it will be seen that its national power 
is proportionate to the aggregate annual incomes of its people, 
and is out of all proportion to their relative numbers. 

The doctrine which has caused many economic writers to 
regard the relative rights of nations, and the means of their rela- 
tive growth in wealth, as having been eliminated from the science 
of political economy is, that since, in all exchanges between mer- 
chants in different countries, the exporter in each country gets 
an equivalent value for that which he exports, and a profit, 
therefore the country importing must always grow richer by the 
trade. This is the famous shibboleth of ' ' equivalence of values 
in trade " by which the Manchester school of economists claim to 
have established as a fundamental truth in political science, that 
the only function a government can wisely exercise in the matter 
of trade is to "let it alone." To this the answer comes, " Let it 
alone — ivhen ? " Let it alone after, by centuries of armed con- 
quest, coi-rupt treaty and profligate legislation, it has been throt- 
tled, felled to the ground, bound and gagged ? 

' ' Letting trade alone " would mean as between Great Britain and 
India, that the former should withdraw her armies and leave the 
Hindoos to run their country.* It should have let Indian 

* A writer in the Contemporary Beview for June, 1386, Mr. Samuel Smith, says : — 
*' I said that another reason why the natives looked with jealousy on the growth of 
the foreign trade of India was, that it was largely at the expense of their home indus. 
tries. It is hardly realized in England that our cheap machine-made goods have 
destroyed the bulk of the old hand-made manufactures of India. At one time a con- 
siderable part of the population was employed in these industries. India now imports 
about thirty-five millions worth of manufactured goods, chiefly cotton cloth, hardware, 
and pottery, which were once made at home. If we allow £3 per head as the annual 
income of each person in India, the making of their goods must once have sustained 
about seventeen millions of people. Now they are imported, no doubt at a cheaper 
cost, and according to the formultie of political economy, the labor and capital so 
employed can be turned to more profitable directions, and India be a great gainer ; but 



National PMoffim. «^ 

trade alone from, the first in order to claim its action to be in 
accordance with any wise or just theory of laissez faire. 

Many things are wealth and profit to individuals which are not 
wealth or profit to the nation of which they are citizens, and vice 
versa. Many things are part of the wealth of a nation which are 
no part of the private wealth of the people. Public and private 
debts generally are individual wealth, btit they are in the first 
count or point of view only deductions from the wealth on which 
they are liens, and therefore leave the aggregate of national 
wealth unchanged.* On the contrary, mountain peaks, inac- 
cessible to the foot of man, lakes, rivers, and untouched mines 
and forests, roads and highways, laws and the general standard 
of civilization, the army and navy, may be wholly inappropriable 
by individuals, and yet may form chief elements and causes of 
the nation's wealth. The mountain peaks attract and control the 
air currents and the rainfall, without which fertility could not 
exist, and a continent could be only a Sahara. The army and 
navy, as in the case of England and India, may be the cause of a 
diversion of the trade of one country to the producers of another 
and so may be of great industrial importance to the country 
maintaining it, and a leading source of its wealth. So, while 
Roman laws and roads, or Greek art and culture, were not citizen's 
wealth and did not make one Greek or Roman richer thaii 



it so happens that the hand-loom weavers and the small artificers who made these 
goods in this simple native fashion, and as a hereditary calling, had no other trade to 
turn to. The capital which was their trained handicraft was destroyed, and they had 
either to starve, or take up vacant land for farming, or become coolies. Most of them 
took to agriculture ; but it was a hard struggle to live, for all the good soil was already 
taken up, and they had to reclaim from the jungle barren land, on which they could 
barely subsist. The general result has been to make India more than ever a country 
of poor peasants, with little variety of pursuits. Of course this process greatly 
increases the foreign trade. The people of India require to export a large portion of 
the produce of the soil in order to buy their clothing and utensils, and anorber large 
portion to liquidate the " Home charges " and private remittances made to England, 
When thus analyzed, it will be seen that it is futile to reckon increase of foreign trade 
as equivalent to increase of wealth ; it is rather a substitution of foreign for domestic 
exchange. The food ancj raw produce are exchanged against the cloth and hardware 
of England, instead of against the products of innumerable small makers at home." 

* Professor Sidgwick (" Politica Economy," p. 40), holds that "credit is a source of 
■wealth of which the value is measurable by the additional profit that it enables him to 
obtain." In other words the value of credit is the capitalized sum or principal on 
which the additional profit it brings us would be the interest. In this sense the volume 
of credit ordinarily outstanding in a country is an addition to the country's wealth not 
to the extent of the credit, but to the extent of the capitalized sum by which the 
credits stimulate production and increase earnings so as to pay the current rates of 
interest on such sum. 



68 ECONOMIC PHILOSOPHY. 

another, they had great potency in making Rome and Greece as 
republics and the empire of Macedon, as well as that of Rome, 
wealthy relatively to other nations. The growth of private 
wealth depends on the stability with which free exchange of 
commodities, lands, and services, is made to take the place of 
individual mob force and of foreign conquest as a means of 
obtaining the satisfaction of human desires. This stability of 
exchange depends on the certainty with which succession to office 
in established order is preserved, whether it be by elections, by 
rank, or by birth, as well as on the fidelity with which official 
decisions are obeyed or their obedience compelled by sheriffs, 
police, armies, and navies. In this manner, of two countries 
having equal advantages, at the same time, one may be growing 
in wealth because it has a good government or an efficient army 
and navy, or vigorous laws, or a good police, while another may 
be declining in wealth or may be suddenly subjected to vast cost 
for want of them. 

The United States profess to be one of the few nations which 
may safely exist without other army or navy than that which it 
can recruit or build after the emergency which calls it into use 
shall have arisen. If this claim be sound it still would not follow 
that either of the great European powers could with safety 
imitate such an example. Nor was the United States, on the 
occasion of its recent war, able to enlist an army so much more 
rapidly than its Confederate foe as to commend the example per- 
emptorily to governments encompassed by greater dangers and 
inheriting a habit of greater caution. 

In these armies and navies, revenues and national credit, 
administration of justice, ways of transit and means of exchange 
and payment, are found forms of national wealth which would 
not be included in any aggregations of private wealth. 

As national wealth rests on bases not entirely identical with 
private wealth, so also does national profit rest on other bases 
than private profit. It is because many occupations present a 
very jDOor field for private profit, but are of gi-eat national advan- 
tage, while others afford an easy and large private profit, but 
are a great public injury, that the state seeks to wield the taxing 
or punishing power to suppress the latter and develop the former. 
It taxes the liquor-sellers and pays over the fund to the school- 
teachers and the coui-ts, because liquor-selling, though easily prof- 
itable to the merchant, is injui'ious to the people. In vain might 
any pretended economist argue that because a farmer buj's all 



DEAR CHEAPNESS. , 69 

the whisky necessary to inebriate him at less than the market 
price, there is a perfect equivalence of exchange between the 
value of the farm he is drinking- up and the value of the whisky 
he is getting in exchange for it. Tlie answer would be that 
there can be no cheapness in tlie purchase of things that it is 
a loss to accept as a gift. The Trojan horse was not cheap because 
the Greeks supplied it for nothing. Neither is any importation 
cheap which contains within its belly the means of permanently 
destroying an important industry. 

31. Tlie Evanescence of Wealth. — Wealth disappears 
by consumption, which may be either productive or unproductive, 
by depreciation and by decay. Of these modes of disappearance 
depreciation is the mere decline of demand, or abandonment of 
the use by society of that which once was wealth, whereby it 
ceases to be wealth though it still exists. Supposing a population 
to have once existed in Babylon or Nineveh comparable in num- 
bers and wealth to that which now exists in France or the United 
States, there must have been a gradual extinguishment of land 
values in those countries about equal to the entire present land 
values in these two modern nations. The extinction of values in 
India by the extinguishment of manufactures has been very 
great. Before its partial conquest by the Portuguese and 
English, it was the synonym for gi"eat national wealth, insomuch 
that Milton could build no higher metaphor by which to define 
infinite riches than 

— all the wealth of Ormuzd and of Ind. 

To-day India is the pauper nation, a burden to those who have 
fed on her riches . In Persia, Arabia, Turkey, Egypt, Morocco, 
Algiers, Spain, Italy, and Greece, there has been a disappearance 
of wealth which goes far toward balancing the modern increase 
of wealth in France, Germany, the Netherlands, Great Britain, 
and the two American continents. 

All forms of wealth have their term of life or duration, from 
that of the flower which fades in an evening to that of a civiliza- 
tion which lasts for centuries. From all society may withdraw 
its demand, and with that, however durable the structure, the 
value ceases. In j)arts of Asia the people are proud to wear the 
clothing worn by their ancestors, but decline to dwell in their 
habitations, even though they be princely castles. Hence in 
Persia every city is made up one-half of ruins, and in time suc- 
cessive cities rise near the same spot, as Seleucia, Ctesiphon, 



^0 , Economic philobopey. 

Almadin, Kufa, and Bagdad were built successively from the 
ruins of Babylon. 

In modern times, and in the most prospei'ous countries, deserted 
villages and abandoned farms mark spots where wealth has been 
sunk by mere depreciation, the current being led elsewhere by 
the opening of canals or railways which tapped instead of feeding 
the old localities. Even in the heart of New York city, when the 
wholesale dry-goods merchants removed from Pearl and Water 
Streets in 1847 to 1857, over to Chambers and Warren Streets, 
property on the former streets fell to one-tenth its former value, 
from which it recovered by becoming a center of the oil traffic. 
Ireland, since 1846, and Portugal, have receded largely fi'ora for- 
mer conditions of prosperity; though in the last quarter of the last 
century Ireland gained several millions in population, notwith- 
standing her absentee landlords and her Celtic effervescence. 

The destruction of wealth, essential to the creation of govern- 
ment or maintenance of nationality, is by some classed as unpro- 
ductive, and by others as productive consumption. It cost France 
one million lives and seventeen hundred millions of dollars to 
maintain under Napoleon twelve years of war with the allied 
powers. * It probably cost the United States in loss of wealth in 
all forms about nine thousand millions of dollars to suppress the 
war for secession by the slave-holding states, including the losses 
in both sections of the Union. But this was offset as to the 
Northern States by so extraordinary a quickening of internal 



* " From 1803 to 1815, twelve campaigns cost us nearly a million of men, who died 
in the field of battle, or in the prisons, or on the roads, or in the hospitals, and six 
thousand ?nillions of francs. . . . 

"■ Tivo invasions destrotjed or consumed, on the soil of old France, ff teen hundred 
millions of raw products, or of manufactures, of houses, of workshops, of machines, and 
of animals, indispensable to agriculture, to manufactures, or to commerce. As the 
price of peace in the name of the alliance, our country has seen herself compelled to 
pay fifteen hundred additional millions, that she might not too soon regain her weil- 
beine;, her splendor, and her power. Behold, in tivelm years, nine thousand millions 
of francs,^^ (seventeen hundred millions of dollars), "taken from the prodvctive 
industry of France and lost f we tw. We found ourselves thus dispossessed of all our 
conquests, and with two hundred thousand strangers encamped on our territory, where 
they lived, at the expense of our glory and of our fortune, until the end of the year 
1818.'"— Dupin. 

The effect for a time is thus described by an eminent French engineer :— " I have 
frequently traversed in different departments, twenty fquare leagues, without meeting 
with a canal, a road, a factory, or even an inhabited estate. The country seemed a 
place of exile abandoned to the miserable, whose interests and whose wants are 
equally misunderstood, and whose distress is constantly increasing, because of the low 
prices of their products, and the cost of transportation."— jlf. Cordier. 



VANISHING VALUES. VI 

and external commerce, and of both agriculture and manufac- 
tures, as to make the net increase in wealth during this decade 
rather greater than the usual increase. 

The disappearance of wealth by decline of values in advancing 
states like Great Britain and x\.merica, is a fact to which the cen- 
sus gives no adequate recognition for three reasons, viz. : 

1. Because in. modern times by various means the volume of 
money is constantly on the increase, and hence all values are 
being measured by a medium whose measuring value is con- 
stantly lessening, and which tends therefore to swell the money 
terras in which all aggregate valuations are expressed, whether of 
lands, labor or commodities. This is one of the deceptive feat- 
ures about all tables of increase in national wealth.* 

2. Interest prompts a loud mention of new enterprises and 
silence regarding those that disappear. 

3. The machinery of statistical inquiry has never been 
devised with the view of collecting depreciations and losses of 
wealth. 

Dr. Carey estimated f that the whole value of the land of Great 
Britain, with all the improvements expended upon it from the 
beginning, would not equal one years' wages of those who are in 
some way concerned in the work of production upon its surface ; 
also that the cost of making the improvements on the surface of 
the land in New York and Pennsylvania, has been at least five 
times greater than the existing value of the improvements. The 
course of production is first of labor into consumable commodi- 
ties, food, clothing, etc. , as when the farmer raises corn. Then a 
conversion of these into reproductive wealth or implements of 
production which are not in themselves consumable except by 
wear and tear. Then a loss of value on the part of these which 
sooner or later extinguishes it altogether. The last process of 
extinguishment may require years or centuries, but so far as the 
possibility of deriving enjoyment directly from its consumption is 
concerned, such possibility is extinguished forever the instant it is 
converted into reproductive wealth. The ready perishability of 
all enjoyable wealth renders necessary to each person who obtains 
or produces more of any one form than he can consume that he 
shall exchange it for reproductive wealth as the only means of 
avoiding its total loss. 

* The term money as used in this' sentence, must be understood as comprehending 
all transferable credit as defined in chapter on money, 
t " Social Science," by McKeau, p. 93. 



72 ECONOMIC PHILOSOPHY. 

The facility with, which reproductive wealth, i.e.\ lands, mines, 
factories, railways, etc. , can be exchanged for enjoyable or con- 
sumable wealth should not conceal from us the fact that, as enjoy- 
able wealth, it is lost to society forever for all enjoyable purposes. 
Mankind can never eat, drink or wear their farms, factories, 
banks, railways, money or ships. The storage of values into these 
forms precludes the enjoyment of them finally and irrevocably, 
though they are still exchangeable for those we can enjoy. If it 
can be said to be abstinence for one who has provided for himself 
all the corn, meat, apples and fish he desires, to exchange what he 
can not consume for some form of non-consumable wealth such 
as money, land or ships, then it may be said that capital dates 
from abstinence. It rather dates from an excess of sustenance. 
This excess is exchanged for money, stocks, cars and ships, con- 
cerning which abstinence is impossible because enjoyment is 
impossible. The first law of wealth is therefore that the surplus 
of sustenance over one's own capacity to consume can only be 
made to profit its possessor by exchanging it for means of produc- 
tion. Of these, the rate of consumption is slower and the sole 
enjoyment obtainable from them is tliat which flows from custody, 
control or power. 

The operation of the law of evanescence is slowest on those 
forms of property of which the uses are almost social. A book, 
considered as a literary work, is an extremely social form of prop- 
erty, because the greater the number of others who read it the 
greater is our enjoyment in reading it. The best readers can 
only afford to read a book when it is certified to them that the 
number of others who read it is very great. Its value to each is 
proportionate to its diffusion among manj^ But great books are 
more nearly imperishable than any other form of wealth. A 
Chicago publishing house adopts as its motto the legend, " Words 
are the only things that never die." It is very doubtful whether 
some of the narratives in G-enesis are not older as writings than 
the pyramids. But as sayings or legends not reduced to writing 
there is reason to believe they are tlie older of the two. 

So the use of all inventions and discoveries is necessarily social, 
and the wealth they give rise to is imperishable — albeit it is ofteU' 
too social in its use to be the subject of any private appropriation 
whatever. 

Works of art and architecture are tolerably permanent in dura- 
tion, compared with food and clothing, but far less permanent 
than are the books which pass into univei'sal use. They are 



SOCIAL USES OF PRIVATE WEALTH. 73 

therefore social in their uses, compared with food and clothing, 
since they must be seen by many at once to give the highest 
pleasui-e either to their creator, possessor, or viewer. They are 
less social than the great books of the world, however, such as 
the Bible, Homer's Iliad, the Zend Avesta, Justinian's Institutes, 
and Shakspeare, since but a few scores of people may behold 
them at once, and then only by much cost and pains of ti'avel, 
while these great books can be read by millions at once at the 
cost of less than a common meal. 

Thus wealth is evanescent in the degree that it is vitally neces- 
sary to an individual and capable only of a selfish use except as 
it may be exchanged. It is enduring only as it is incapable of 
either a vital or selfish or merely personal use, but must be put 
to social use. A. large farm is in social use because its crops must 
feed society. They can not be eaten wholly by those who cul- 
tivate them. A small farm is in a more personal use because it 
may feed only those who till it. A lane is a more social use of 
land than an enclosure. A highway is more social than a lane. 
A railway is more social than a highway. Hence it is easy to 
close up a lane, difficult to close up a highway, and since rail- 
ways were built, hardly, except in China, has one ever been closed. 

The species of wealth, whose use is of all others perhaps the 
most social, is money, since the very function of money is to 
bring men who do not know each other, and have no interest of 
an emotional kind in each other, into relations of reciprocal utility 
and mutual help, either as employers and workmen, sellers and 
buyers of goods or lands, lenders and borrowers of money itself 
or the like. The iise of money being thus social, its value is the 
most enduring perhaps of any merely material commodity — 
meaning by material commodity one that may j)erliaps serve 
ideas but contains none, in the sense that great books, discourses 
or works of art embody ideas. Twenty kinds of money, however, 
have prevailed and disappeai'ed in England since Ossian wrote 
his address to the sun, but that brief poem shows no symptom of 
decay. The pound changes to the broad, the broad to the guinea, 
the guinea to the sovereign, but no subserviency of fashion over- 
takes the lines : 

Oh, thou that rollest above 
Kound as the shield of my fathers, 
Whence are thy beams, O sun, 
Thine everlasting light ! 

Yet, compared with something less social in its uses than money, 



^4 ECONOMIC PHILOSOPHY. 

as, for instance, with a reigning house, a titled family, or a single 
possessor of wealth, money itself, the pound sterling, for instance, 
seems imperishable. A lineal descendant of the Plantagenets, 
it is said, sells meat at a butcher's stall in London. The titles of 
prominent English nobles are of very recent date, and the aver- 
age life of a great fortune seldom equals that of a crow. 

Doubtless, many possessors of wealth have practised abstinence 
at that critical period in early life, when, their earnings being 
small and their savings meagre, and such as might easily have 
been spent in a night of debauchery, they have denied every 
temptation in the determination to use their savings as capital. 
All capitals must begin in a pin's value, as all life begins in a 
germ cell. 

In the sense in which life is the fruit of the germ cell, wealth 
is the fruit of abstinence. But as no multitude of germ cells are 
the equivalents of one life, so no multitude of abstinences are a 
fortune. Life, besides the germ cell, implies a period of growth 
by a continually increasing organism. So relative wealth, besides 
abstinence, implies a long period of growth in the active assimila- 
tion of profit, i.e., in the active conversion of an excess of income 
over expenditure into the means of creating wealth. 

Mr. Grunlund believes that he has dispi-oved the proposition 
that wealth is the fruit of abstinence, when he shows that a 
laborer earning two dollars a day and saving one dollar would 
need to live three thousand years to accumulate one million. 
The answer is, that this singular hypothesis assumes that the 
laborer keeps right on working for wages without using his past 
acquisition as a capital, but simply keeping it as a hoard. Such 
a man being, according to the assumption, a cui'se to society in 
the economic sense, since he is daily withdrawing a given stock 
of wealth from the world's use instead of employing it in the 
world's service, ought not to be permitted to accumulate a million 
in any length of time whatever. He would be a nuisance after 
he had reached from one thousand dollars to five thousand dollars 
if he did not give it a social use of some kind. But should he 
give it a social use of any kind, whether in employing labor, 
building houses, or selling goods, he will pass out of the germ 
stage of accumulation. As we shall show in our chapter on 
profit, if he employs one thousand men at two dollars a day each, 
judiciously, his own gross returns may, and would be likely to 
rise to one thousand dollars a day, and in that case he would 
obtain the million of dollars in a few years. 



NO MORE SPUR. 15 

The various forms of storing wealth permanently are usually 
cemeteries of human labor and the means of ostentation and dis- 
play. Gold and silver, and perhaps diamonds, are mieans of 
storing wealth, the former of which, through their use as money, 
have also been of inestimable service. But when, as in the build- 
ing of the great pyramid of Cheops or Gizeh, the toil of three 
hundred and sixty thousand men is employed for twenty years 
on a mountain of stone, the economist is puzzled to know whether 
this, however permanent the structure, is a storage of value or 
an unrelieved waste of toil. 

32. Cau Poverty Be Abolished ? — All exchanges are made 
out of fullness, i.e., by those who have something to give for what 
they get. But it can hardly be claimed that the exchange of sub- 
serviency on the i3art of the slave for despotic protection on the 
part of his master is made out of the slave's fullness of courage, 
strength and force. It is rather out of his emptiness or lack of 
these qualities, and his fullness of meekness, timidity and other 
negative qualities that he is enslaved. 

So the exchange of the laborer's time, strength and will for the 
wage which he gets for his labor may imply fullness of health, 
strength and muscle on the part of the laborer, but it in nearly all 
cases implies relative emptiness of purse. From three-fourths to 
nine-tenths of mankind labor for the wage, salary or fee which 
they get for the labor, and because but for the means of obtaining 
the food, shelter and clothing which they buy with their wages 
from week to week, they would perish within a very few weeks. 
The vital question to the humanitarian is whether this system of 
living "from hand to mouth " on the part of so large a portion 
of mankind is an economic necessity, in the same sense that the 
regular return of winter's cold and summer's heat is a physical 
necessity. 

The opinion is rapidly becoming popular that we are approach- 
ing a period when poverty, in the sense of an immediate and 
pressing necessity that one shall work in order to escape physical 
suffering from hunger and nakedness, will be abolished absolutely 
as to everybody. When the advocates of this opinion are asked 
if, as men are now constituted, they will not cease working the 
instant they are relieved from the fear of hunger, cold and home- 
lessness they reply, " No ! men and women will so far have risen 
out of their present enthralled condition as to be disposed to work, 
as Fourier defines it, passionately and because they enjoy the 
woi-k, and will select each the work he most enjoys, and which 



76 ECONOMIC PHILOSOPHY. 

will at the same time profit all the most." This is not only the 
root idea of Fourierism and of all socialism, but finds a large 
encouragement also in many of the altruistic teachings and ten- 
dencies of the Chi-istian and Buddhist religions. 

One can hardly believe that the industrious labors of the bee, 
the ant and the beaver are prompted by either the love of 
gain or acquisition on the one hand or by fear of suffering on the 
other. Yet if the bee be taken to a country in which the flowers 
bloom all the year round, it (or rather its immediate kinsman, for 
the average life of the neutral worker is only one working sea- 
son) will cease after one season to lay up honey in a country in 
which the store can never be wanted ; conceding that there is an 
irresistible instinct of labor in certain insects and animals, there 
certainly is not in man. He can not be depended on to render 
many of the services now essential to the maintenance of society 
after he is beyond the need of the wages he will earn. In casual 
instances he will do so. But one has only to reflect how long he 
would have to wait before a two cent morjiing paper or a cup of 
coffee would be brought to him, if every person in the world were 
a millionaire, to see that for all the smaller and cheaper subdivi- 
sions of human service, on which the comfort of our daily life 
depends, he is indebted to the fact that the person who renders it 
is poor. 

The industries of society may be compared to a low pressure 
engine in which the piston works with wealth pushing on one 
side and poverty, or an exhausted receiver, pulling on the 
other. 

When the economist urges that if all the wealth on the surface 
of the earth were converted into food and clothing it would not 
support the world's population three years ; that in fact the act- 
ual food and clothing now produced, under the stimulus and 
pressure to which mankind are subjected, would last but little 
more than one year, and hence that the continued pressure of 
impending pain is necessary to induce a degree of industry ade-. 
quate to sustain the population of the world in its present degree 
of comfort, the socialist replies : " I concede that that is now true, 
but it does not follow that it will always be true." 

So far as the socialist bases his complaint on the assertion that 
the wealth accumulated in the hands of the few wealthy is so 
much abstracted or withdrawn from the stock of goods that would 
be consumable by the poor, he is evidently in error : for, as will 
ai^pear more fully in chapters IV. and V. , the surplus wealth of the 



THE WANT PRESSURE. 77 

rich must be invested in such modes as to give society the use of 
it, or it can earn no income. 

So far as we can see, the fear of impending suffering, as well as 
the prospect of enjoyment or rest from the possession of wealth, is 
necessary to insure a degree of wealth-production sufficient to 
keep mankind alive. Whoever could awake to-morrow morning 
on a world in which every human being should be, by whatever 
means, relieved from the possibility of suffering in case he should 
render no service to others, would awake on a world in which 
wealth, or the ability to command the services of others, would no 
longer exist. One might as well imagine a world in which the 
food would consist of strains of music. If mankind were fed at 
all it could only be as the prophet was fed by the ravens. It 
would not be an economic world, and its conditions are so impos- 
sible that it is idle to speculate on what it would be. 

In the existing world the pressure of economic want, present or 
prospective — in short, poverty — is as potent a force in wealth pro- 
duction as hunger is in causing the body to be fed or cold in caus- 
ing it to be clothed. Publicists agree that the isothermal limits 
within which the highest intellectual culture is possible are those 
in which the body can not be sustained, without almost continu- 
ous labor, but within which by continuous labor comfort is possi- 
ble. The want-pressure essential to provoke the maximum of 
effort does not seem heretofore to have resulted in the production 
of more of the necessaries, luxuries, and conveniences of life than 
were at all times necessary to a fair average degree of comfort. 
Presumptively, therefore, the want-pressure has not been in excess 
of what was needed. In so far, however, as instances can be 
adduced in which men work on just as usefully as ever after this 
want-pressure is removed, the economist will be prepared to 
admit that its prospective complete removal presents an improved 
ai^pearance of being consistent with the complete performance of 
the labors essential to the maintenance of mankind. 

Meanwhile, is it either cruel or fallacious to assume that there 
are forms of wealth or power fully equal, in value to their pos- 
sessor, to pecuniary power ? Health and muscular power are 
usually sacrificed in the successful pursuit of wealth, but are 
usually retained and enjoyed in a life of moderately hard and 
steady labor. ' ' In the sweat of thy brow thou shalt earn thy 
bread," is found to be a curse pregnant with a blessing, when it 
happens that those who pride themselves on having escaped the 



18 ECONOMIC PHILOSOPHY. 

curse of toil betake themselves to the j)liysician for medicines 
which will restore the perspiration. 

The wealth-pursuit, when most successful, often hardens the 
heart and steels the disposition of the pursuer into a degree of 
callousness to all the more generous impulses which becomes 
fatal to the enjoyment of wealth when obtained. 

In such cases the highly successful man financially becomes a 
failure in life socially. There is a certain respect and faith on the 
part of his fellows which many poor men have never lost but 
which he is powei'less to gain. 

It is also true that the "hand-to-mouth " or "happy-go-lucky " 
life of those who do not strain after more than the privilege of 
living in a humble way escapes much of the torture and care 
incident to a life of winning and losing on a lai'ge scale. 

If by the ' ' abolition of poverty " is meant the ensuring a rea- 
sonable certainty of comfortable support to all who are ready to 
do what they can to be useful to their fellow-men, it may be 
doubted whether aiay humanly invented system can effect much 
improvement on the one now in force. The notion that poverty 
can be abolished is a flattering gospel, far more attractive to our 
human impulses than to have the poor always with us, and espe- 
cially than to be ourselves the poor. Without professing the 
least faith in the efficacy or convincingness of epithets, we are 
compelled to feel, though we may not say,* with Franklin, " He 
that tells you you can succeed in any way but by labor and econ- 
omy is a quack." 

* Quoted thus by WolowBki in Roscher Pol. Econ., Am. Edin., p. 21. 



CHAPTER III. 

VALUE AND PRICES. 

33. Wliat Is Value ? — Value is the degree of esteem, affection, 
appreciation or desire felt for an object, by those wishing to pos- 
sess it, and expressed in terms of the other objects of esteem, affec- 
tion, and desire with which they bring it into comparison. It is 
the sense persons have of the worth of things. If they already 
have the things, their value is what they will forego having 
rather than part with them. If they have them not the value of 
them is what they will give for them. Hence value is a sense of 
relation or equation between two things, and both have to be esti- 
mated. In tiiis sense it is like weight, measurement, size, etc. , in 
all which conceptions two things are held in mind for comparison, 
viz., the object and the pound, foot-rule, cubic yard, ton, or other 
standard with which it is compared and without naming which 
no idea of weight or measurement or size can be conveyed. As 
the idea that a stick is two feet long cannot be thought of, except 
by comparing the stick with a standard called a foot which was 
originally a man's foot, so the idea of value cannot be thought of 
excei^t by comparing the thing valued with some standard, as a 
penny, a sheep, or an ox. To say one cow is worth four sheep is a 
statement of value as truly as to say it is worth forty dollars.* 

* Adam 6'»iz<A ("Wealth," etc., p. 15) says: " At all times and places that is dear which 
it is difficult to come at, or which it costs much labor to acquire, and that cheap 
which is to he had easily or with very little labor. Labor aloue, therefore, never vary- 
ing in its own value, is alone the ultimate and real standard by which the value of ail 
commodities can at all times and places be estimated and compared. It is their real 
price; money is their nominal price only. . . As a measure of quality, such as the natural 
foot, fathom, or handf ull, which is continually varying in its own quantity, can never be 
an accurate measure of the quantity of other things, so a commodity which is itself 
continualy varying in its own value can never be an accurate measure of the value of 
other commodities. Equal quantities of labor at all times and places may be said to 
be of equal value to the laborer. In his ordinary state of health, strength, and spirits, in 
the ordinary degree of his skill and dexterity, he must always lay down the same por- 
tion of his ease, his liberty, and his happinpt-s. The price which he pays must always 
be the same whatever the quantity of goods which he receives in return for it. Of 
these, indeed, it may sometimes purchase a greater and sometimes a smaller quantity, 
but it is their value which varies, not that of the labor which purchases them." 

H. C. Carey says " value is the measure of the resistance to be overcome in obtaining 
those commodities required for our purposes— of the power of nature over man— the 



80 ECONOMIC PHILOSOPHY. 

Adam Smith supposed that labor is the standard of value of all 
commodities, and that it had a fixed value in itself. He did not 
seem to conclude that value, like weight or length, is not a quality 
of one thing, but a ratio between two. He does not tell us what 



cost of reproduction (making or getting anotlier of the same kind) being the limit 
which value cannot exceed." 

Boscher says (" Political Economy," vol. 1. ch. 1, sec. iv): "The economic value of 
goods is the importance they possess for the purposes of man, considered as engaged 
in economy (housekeeping, husbandry), the quality which makes them exchangeable 
against other goods. A clear distinction, however, should be made between utility 
and value in use. Utility is a quality of things themselves, in relation, it is true, to 
human wants. Value in use is a quality imputed to them, the result of man's thought 
or of his view of them. Thus in a beleagured city stores of food do not increase in 
utility but their value in use does." 

Ka7i i/ara;("Kapital," vol. 1, p. 6) Bays, "that which determines the magnitude of 
the value of any article is the amount of labor socially necessary, or the labor time 
socially necessary, for its production . . . the magnitude of this value is measured by 
the quantity of the value-creating substance, the labor contained \i\ the article. The 
quantity of labor is measured by its duration, and labor-time in its turn finds its stand- 
ard in weeks, days, and hours." Tills he explains, however, to be " not idle and unskil- 
ful labor-time but a^erage homogeneous labor power," i. e., what the average laborer 
will do in the given time. By this he measures the time socially necessary. The intro- 
duction of machinery lessens the time socially necessary. 

" The labor-time required changes with every variation in the productiveness of 
labor " (p. 7). 

(P. 68.) " The value, or In other words, the quantity of human labor contained in a 
ton of iron is expressed in imagination by such a quantity of the money commodity as 
contains the same amount of labor as the iron." 

Bastiat (" Harmonies of Political Economy, Sterling," 135) .- " "Value is the relation 
of two services exchanged." 

Cairnes (" Leading Principles," p. 11) defines value as " the ratio in which commodi- 
ties in open market are exchanged against each other." 

F. A. Walker (" Political Economy," p. 5) says " value is the power which an article 
confers upon its possessor, irrespective of legal authority or personal sentiir.ents, of 
commanding in exchange for itself the labor or the product of the labor of others." 

Cherbidiez ("Precis de la Science Economique," vol I., p. 202) says " the value of a 
product or of a service can be expressed only as the products or services which it 
obtains in exchange . . . If I exchange the thing A. against B., A. is the value of 
B.; B. is the value of A." 

Jewus (Primer, p. 98) defines value as proportion in exchange. 

Penij (A. L.), following Bastiat, defines value as " the relation of mutual purchase es- 
tablished between two services by their exchange."-—" Political Economy," p. 126. 

La Vasseur says, (" Precis d' Economic Politique, p. 175) " the relation resulting 
from Exchange— fe rapp vt resultant de Vechange . " 

Locke, McCullough, Ricardo, &i\di Carey agree in making labor the sole cause of value. 

The most vigorous opponent of this theory of value is Henry Dunning MacLeod, 
of Cambridge, who argues as follows ("Principles of Econ. Philosophy," vol. I, p. 303): 

I. ^^If Labor t)e the sole cause of value, then xohatexer thing labor is bestowed upon must 
(always thereafter continue to) have a value (proportionate to the labor bestowed upon 
it)." The parts in brackets are our own, but are essential to a complete statement, 
and are embodied in MacLeod's fourth point. 

If this proposition were true, no person could ever make a loss by expending labor on 



MACLEOD ON VALUE. 81 

he means by labor, viz., whether it means working for a certain 
time a day for instance, without regard to results accorfiplished, 
or working with, a certain intensity, i. e., until fatigue sets in, with- 
out regard to either time or results, or working with a certain ef- 



things not needed, whereas this is one of the most frequent sources of loss. The Brit- 
ish Government expended in 1864-70 £20,000,000 on a class of armored gunboats wliich, 
before any use was made of them, were condemned as worthless, owing to improvements 
in the construction of guns. They expended large sums on iron guns which became 
useless by substitution of steel guns, etc. 

A telegraph company expended large sums of money in constructing a line through 
Siberia and Alaska whereby to get telegraphic communication between Nev/ York and 
London via San Francisco and Behrings Straits, which was made totally worthless by 
the laying of the first Atlantic Cable. Indeed values are constantly passing out of all 
forms of wealth by supersedure through substitution of other forms and fashions as 
well as by use. MacLeod's other points were : 

II, If labor is the cause of all value, then all variations in value must be due to vari- 
ations in lab07\ To this he urges that certain land in London is worth £1,000,000 per 
acre irrespective of the value of any labor bestowed on it. Yet some day this entire 
value would have disappeared as it now has from Nineveh and Babylon. 

When a fair is held in a town the booths at the fair acquire a value. At the end of 
the fair they lose it. 

Timber trees have value when no labor has been bestowed on them. Cattle, 
herds, and flocks have value, though they pasture and multiply of themselves without 
the aid of human labor. 

The owners of ore mines and quarries attach a value to them before any labor is 
bestowed on them. 

A whale stranded on the beach in the Firth of Forth sold as it lay, the free gift of 
nature, for £70. 

The cast-off skins of snakes at the zoological gardens in Paris sell to chemists for the 
uric acid in them for 9 shillings the pound — not a product of human labor. 

MacLeod's third point is : " If labor be the sole cause of value, then all things pro- 
duced by the same amount of labor must be of equal value." 

If so, if a sportsman shoots a pheasant with one barrel and a crow with the other, 
they ought to have equal value. A pearl and its shell, a diamond and the rubbish it is, 
found in, a salmon caught on one hook and a dog fish on the other of the same line 
would have equal value. 

IV. If labor be the sole cause of value the value must be projiortional to the labor (in- 
cluded in our point I.) 

V. If labor be the sole cause of value a thing once produced by labor must always 
have value and the same value. 

On the contrary, a thing has value in one place and not in another and at one time and 
not at another. The Jesuits buying provisions of the savages of Polavri offered gold 
and were laughed at. The savages would take only iron. A professor's learning in 
Greek or mathematics has value in a university but none in the Hebrides. A lawyer's 
abilities have value, in London but none in Timbuctoo. 

Medical knowledge has no value where no one is ill. 

VI. If labor is the sole cause of value what is the cause of the value of labor ? 
MacLeod sums up thus (p. 317) : " Hence we see 

"1. That there are vast quantities of property, both corporeal and incorporeal, which 
have value, upon which no labor was ever bestowed. • 

"2. That quantities, both corporeal and incorporeal, may be produced by labor which 
has no value. 



82 ECONOMIO PHILOSOPHY. 

flciency, as for instance until a field is planted, without regard to 
either time, intensity, or results, or working- until a certain result 
is obtained, as for instance a chair is made. To say that labor 
can be measured in quantity by mere time, without regard to re- 

"3. That the same quantity of labor may produce products one of which has value 
and the other no value. 

■'4. That quantities produced by varying quantities of labor have the same value. 

"5. That things produced by labor may have value in some places and not in other 
places ; and at some times and not at other times . 

"6. That things produced by less labor may have greater value than things produced 
by more labor." 

From these indisputable propositions, the result of practical experience, the undeni- 
able inference is that labor is not in any vcay whatever the form or the cause of 
value , or even necessary to value ; and in fact in this commercial country the enor- 
mously greater proportion of valuable property is not the result.of labor at all. 

( — p. 3:33 ) Seeing that Labor and Utility altogether fail to stand the test of being the 
cause of value, what remains ? The only thi^ig which ancient writers, Aristotle, the 
author of the " Erysias," and the Roman Lawyers, in modern times the Physiocrates, 
Smith, Condillac, Whately, Bastiat, J. B. Say, and many others have observed — 
Exchangeability. And what does Exchangeability depend upon ? If I offer something 
for sale what is necessary in order that it may be sold ? Simply that some one else 
should Demand it. Aristotle said long ago that it is chreia or demand that binds society 
together. 

Here it is quite clear that we have now got the true source or origin or cause of value. 
It is Demand. Value is not a quality of an object, but an affection of the mind. 
The sole origin, source, or cause of value is Human Desire. 

( — p. 326). It is value or demand which is the cause of or inducement to labor. Bois- 
guillebert saw this most clearly; he says ( "Factum dela France,'''' ch. v.) consumption 
(consommation or demand) is the principle of all wealth. All the most exquisite fruits 
of the earth and the mostprecious products would be nothing but rubbish if they were 
not consumed. So Hume gays (" Essay on Commerce ") : " Our passions (desires or de- 
mand) are the only causesof labor." Genovesi (" Lezioni de Economia Civile,''' part ii, 
ch. i.) points out that though money is the apparent or proximate measure, the ultimate 
measure to which not only things but their price is referred is man himself. Nothing 
has value where there areno men, and the very few things which [have a low price 
where men are few have a very high price where there are many people. And this is a 
reason why things and services have a much higher price in the capital than in the 
distant provinces. 

So Beccaria says {Del disordine e de rimedj delle monete nello stato di Milano) : "Value 
is the substance which measures the estimation in which men hold things." 

Condillac says, (Le Commerce et le Gonvernment, ch 1,) "This esteem is what is called 
vame. Since the value of things is founded on the want of them or the demand, it is nat- 
ural that a want more strongly felt gives things a greater value, and a want less felt 
gives them a less value. . . A thing has not value because it has cost much, as is com- 
monly said, but people bestow expense on it because it has value." 

Even Adam Srnith (Book 1, ch. ii) describing the vineyards from whose grapes the 
best wines are produced, says, " For though such vineyards are in general more care- 
fully culiivated than most others, the high price of the wine seems to be not so much 
the effect as the cause of this careful cultivation." Smith here perceives that instead 
of labor being the cause of value it is the value that causes the labor to be performed. 
Value then in its true sense signifies an affection of the mind and not a quality in an 
object or the result of labor. The usual phrase is, " I value bo and so." It is the force 
of attraction between the mind and some external object. 



, CARET ON VALUE. 88 

suits, intensity, efficiency, etc., is absurd. Nor does Dr. Smith 
make it clear whether the labor, by which the value of a commod- 
ity is gauged, is the labor expended in bringing it into existence or 
in bringing into existence the commodity which is given in ex- 
change for it. These two quantities of labor are quite distinct, both 
are involved in the equation, and they may be very unlike. 

Dr. Carey describes value and utility by a generalization and 
not by a definition. He says:* " Utility is the measure of man's 
power over nature ; value, the measure of nature's power over 
man. Tlie former grows, the latter declines, with the power of 
combination among men. Moving thus in opposite directions, 
they exist always in the inverse ratio of each other." Many 
instances might be cited in which this generalization holds true 



Says MacLeod again (p. 332) : •' All production is founded upon speculations. Pro- 
ducers find out or think of what other people want and then they produce, and if none 
want or will buy what is produced, such an article has no value. All production, then, 
is founded on speculation, varying through all degrees of prudence, certainty, and risk. 
All producers speculate that there will not only be buyers who will want their products, 
but will want them to such a degree of intensity as to be willing to pay a sum at least 
sufficient to pay the cost of production and a profit besides. Hence, as a fundamental 
truth, speculation is the mother of production and demand is the origin of value." 

J«TO?isC' The Theory of Political Economy," p. 178) says : "If no use could be found for 
the Great Eastern steamship, its value would be nil except for the utility of some of its 
materials. On the other hand, a successful undertaking, which happens to possess 
great utility, may have a value for a time at least, far esceeding what has been spent 
upon it, as in the case of the Atlantic cable. The fact is that labor once spent has no 
influence on the future value of any article; it is gone and lost forever. In commerce 
bygones are forever bygones ; and we are always starting clear at each moment, judging 
the values of things with a view to future utility. Industry is essentially prospective, 
not retrospective; and seldom does the resultof any undertaking exactly coincide with 
the first intentions of its promoters. . . It is equally to be remembered that labor is 
itself of unequal value. I hold labor to be essentially variable, so that its value must 
be determined by the value of the produce not the value of the produce by that of the 
labor." 

Ricardo (Pol. Econ., p. 11) says : " Adam Smith, after most ably showing the insuffi- 
ciency of a variable medium such as gold and silver, for the purpose of determining the 
varying value of other things, has himself, by fixing on corn or labor, chosen a medium 
no less variable. Possessing utility, commodities derive their eschangable value from 
two sources, from their scarcity and from the quantity of labor required to obtain 
them." Ricardo afterward takes in the quality of labor, and the amount of capital 
invested in production, the durability of the capital and the frequency with which it 
can be turned over, and denies that there can be any absolute standard of value- 

Mill defines value as the general power of purchasing commodities as distinguished 
from price, which is the power of purchasing money only. Mr. Mill sometimes speaks 
of "the natural value, i. e., the cost of production," as if the quantity of labor only were 
in his mind, and at others of " the cost of production with the ordinary profit, in other 
words such as will give to all producers the ordinary profit on their outlay," thus recog, 
nizing capital as the producer. 

* " Social Science Condensed," by McKean, p. 197. 



84 ECONOMIC PHILOSOPHY. , 

in a certain peculiar and rather evasive and secondary sense, but 
it is born rather of the love of paradox, and fondness for antith- 
esis, which distinguishes the aggressive mind, than of the accu- 
racy of scientific exposition. For instance, as man increases in 
civilization many things become useful to him for which as a 
barbarian he could have no use, such as books, paintings, imple- 
ments of industry, money, etc. As to society at large, they 
undergo a decline in value, i. e., in cost, pari passu with their 
increase of utility to the individual, because as they are more 
numerously made they can be made at less cost. But it could not 
be truly said, as to a savage ignorant of the use of monej^, for 
instance, that as he became acquainted with its use its utility 
would increase but its value would decline. While a savage it 
would have neither utility nor value. And to the individual 
advancing from barbarism to civilization its value and utility 
would grow together. So it could not be said of the land on 
which a ten-story building is erected in New York City that its 
value declines as its utility increases. It is useful in proportion 
to the number of people it accoramodates and the volume and 
value of the exchanges effected in its I'ooms and offices. But just 
in this proportion do its rents rise, which constitute its value. 
Carey arrives at his paradox by considering utility and value 
only relatively to collective society at different periods of time, 
and relatively to manufactured goods. It may be truly said that 
as man advances in civilization, food, books, and implements 
accomplish more good for mankind at large aud cost it less. 
They are, therefore, to man, collectively, more useful and to each 
individual less costly. But it could not be said in the case of an 
individual that the more useful his services become to society or 
to himself the more their value would decline. 

So far as scarcity is an element in the cost of useful goods, the 
fact of their utility tends to so concentrate human effort on their 
production as to cause a decline in their value. In this way util- 
ity tends to destroy cost by multiplying the useful thing. This 
is a view of value which is limited to producible objects, when 
looked at from the standpoint of collective society, and the com- 
parison relates to successive periods of time. An unproducible 
object, a picture by Eaphael for instance, may grow dearer while 
cotton goods are growing cheaper. 

34. Fallacy of Resting- Value on Labor. — In fact, how- 
ever, the labor of the man who either has no skill or power or 
spirit or opportunity to do anything has no value, as the man 



THE VALUE OF LABOR. 85 

himself is a mere walking appetite, consuming and not producing. 
Labor rises in value where there is competition among employers, 
and falls in value where there is only competition among laborers. 
What Dr. Smith assigns as the causes of the in variableness in the 
value of labor are both untrue and inadequate. It is not true 
that the laborer's surrender of ease, liberty, and happiness is equal 
in all cases. In some cases, and to some persons, labor is a pleas- 
ure, and just the class of amusement tlie laborer would delight in 
if he got no pay whatever. In other cases tbe toil is very irksome 
and of a kind that many persons having the power to perform 
would not perform at any price. Again, a ' ' surrender of ease, 
liberty, and happiness " is not a basis of value. It can not be 
measured. It has no desirable quality in it, to the purchaser of 
the labor or its product. He does not think of it. 

There is a more direct and logical reason why labor can not be 
a measure or standard of value, viz. : that it has no value in itself 
and can not have, since as fast as it creates value the value passes 
into the form of wealth or capital which it creates. As distin- 
guished from capital, which includes all labor performed, labor 
is really labor awaiting performance. In short, the term labor is 
an abindged term, the full term being " capacity to labor. " Before 
a man begins his work for the day, that day's work can not yet 
be said to have a value, because, not having been done, it does 
not exist, and that which has no existence can have no worth. 
When the day's woi'k is done the whole value to which it has 
given rise can not be said to inhere in the labor as a separate 
entity from the thing upon which the labor was done, for, the 
whole object of the labor being to add value to that thing, all the 
value to which it has given rise is in the thing, and the labor, as 
an entity aj)art from the thing on which it was done, having 
ceased to be, can have no value. Hence, though labor supplies the 
commodity to which value attaches, the value itself, as fast as it 
exists at all, is in the commodity, and not in the labor. The sole 
value of labor is the value it exchanges for, viz. : its wages. 

To this it may perhaps be objected, if there be no value in labor, 
why does it exchange for value, viz. , for wages ? Wages are paid 
to induce the performance of the labor which will produce or 
supply the commodity. Wages are a payment for service ; and, 
since nobody values services for their own sake, but only for 
what they will eiTect or produce, it follows that the value or the 
element which is appreciated will always be in the ulterior thing 
which labor is performed to supply. For instance, A is employed 



86 ECONOMIC PHILOSOPHY. 

by B to catch wild pigeons. For this pui-pose A walks two miles 
early in the morning to the place where the pigeons ai^e expected 
to fly. He builds a bower house to hide behind ; prepares a floor 
carefully for the pigeons to light upon ; spreads corn upon it, and 
lays his net carefully at its border, so rigged that by pulling a 
rope he can spring the net over the floor ; mounts his stool pigeon, 
lets loose his flying pigeons to attract the wild game, retires to his 
bower house, and loads and primes his gun, to be ready to 
shoot such pigeons as shall alight on the spar. All these acts are 
his labor, but can it be said that they contain any value in them- 
selves ? They may all be performed and no pigeons appear. In 
that case A would have earned his wages if he worked by the day, 
because he would have performed the service agreed on. But the 
performance of the entire service would give rise to no value. 
All that B values is the j)igeons. He values not the walk, the 
net, the corn, the gun, the bower, the spar, the stool pigeon, or 
the flyer. All these are parts of the service, but no part whatever 
of the value. If, however, on the tenth day of waiting, a flock 
of two hundred and fifty pigeons is snared, netted, and bagged, 
then he gets for the first time value, though he had, on all the 
other days, had the same amount of labor and service, but in the 
labor and service of the previous days there was no value what- 
ever. 

35. Whence Comes Value ? The Consumer. — Value 
is not the result of the labor and service being performed, but, 
on the contrary, the labor and service are performed in order to 
get the value. Value in the foregoing instance expresses the de- 
gree in which the pigeons are desired by B, which estimate 
induces him to employ A to trap them. Value, or the feeling or 
perception that there is value in an object, is what induces, cre- 
ates, and causes all labor to be performed. Because we believe 
corn will be worth fifty cents a bushel we plant it. It is the ex- 
pected value that causes and brings into existence our labor, not 
our labor that causes or creates the value. 

While producers of commodities seek, in producing them, to 
obtain value, and produce them only because they expect them to 
have a value, it is not they that give the value which they hope for, 
since that value is the appreciation felt for the commoditj^ by the 
purchaser, or objectively it is measured by the return commodity 
or service which the purchaser will pay for it. In short, we thus 
trace value back to the demand for consumption, and arrive at 
the truism that, while the producer of the commodity produces 



DEMAND CAUSES VALUE. 81' 

the supply, the consumer makes the demand ; and it is this eifec- 
tive demand, meaning what the consumer will give in exchange, 
that causes and fixes value. 

But, since demand for consumption regulates value, and value 
regulates the quantity of labor which will be employed in pro- 
ducing the thing iu demand, our circle brings us back to the 
point that, in a general way, the quantity of labor which will be 
put into the production will be proportionate to the value, but 
not for the old supposed reason of Adam Smith that the labor 
creates the value, but for the more accurate reason that the value 
(or demand) creates (regulates the quantity of) the labor which 
will be invested in supplying it. 

This deduction of value from demand furnishes us with that 
long-sought "wage fund," which has been to the economists 
what the philosopher's stone was to the alchemists, successively a 
faith, a fraud, and a truism. 

The wage fund is so much of the expected price, to be obtained 
for commodities, as enterprisers will advance in payment for labor- 
time, and for organized obedience to the employer's will, rather 
than forego the prospect of the profit, which the enterpriser ex- 
pects to reap out of the remainder of such price, after paying such 
wages, and also repairs, interest, rent, insurance, taxes, wear and 
tear, etc. For, though the hope of profits is the lure that tempts 
the enterpriser from the beginning, the actual realized profits 
are the last distilled residuum that remains after every cost of 
production has been paid. 

36. The Consumer's Place in Industry. — Because each 
particular commodity must be produced before it can be con- 
sumed, economists have been led to assume that the natural 
order in economics is to treat production as a fact philosophically 
antecedent to consumiDtion. 

In history, consumj)tion precedes production. Nearly all ani- 
mals consume, without producuig anything for consumption, 
except as their bodies become food for others. Bees, ants, bea- 
vers, and other social animals, however, produce social wealth of 
their own kind as truly as does man, and practice socialism and 
communism, but no conscious or intentional exchange of serv- 
ices. Singularly enough the instant animals begin to claim domain 
or property, as social birds and herds all do, or produce wealth, as 
ants, bees, and beavers, they organize on the principle of the di- 
vision of labor and ranks of society, bosses and workers, soldiers, 
sentinels, guides, as do men in the tribal or communal state. In 



' 88 ECONOMIC PHILOSOPHY. 

the savage state man aims to subsist as animals do, entii^ely uj)on 
nature, but the scarcity of objects for consumption induces him 
to supplement nature by care, first by keeping his own flock, 
herd, poultry, and pigs instead of hunting the boar, buffalo, 
and pheasant, then by planting roots instead of digging them, 
until he becomes a systematic producer, first for his own use, 
and then for others. 

Since consumption is the prior and imperative motive whose 
imperious necessities suggest and compel at all times the course 
which production will pursue, it is obvious that as a cause in 
economics consumption takes the lead and stands in the same 
relation to production as the horse does to the cart, as the pro- 
pelling j)ower and the steering force. It is the prices proclaimed 
in the market that rule production in the factory and furnace, 
compelling a shut-down or an increase of labor. It is the prices 
made known on the produce exchange that control the operations 
of the farm and induce farmers to stop raising corn and raise 
cattle or fruit or tobacco. Nor is it the prices which an article 
had last year, or even last month, but those which it is expected 
they will have next month or next year, which are potential in 
causing production. Hence MacLeod's aphorism or fundamental 
principle that "speculation is tlie mother of production " follows 
logically and closely upon his previously enunciated principle 
that " demand is the cause of all value." 

Hence it is, too, that the GTerman socialists Karl Marx and Lassalle 
start by adopting the theory of value usually credited to Adam 
Smith, and cei-tainly held by Ricardo, that "labor causes all 
value," and from thence infer that the function of ascertaining 
the demand is a useless one in industry, as it certainly would be 
if labor were capable of causing value. As it makes no differ- 
ence, according to the socialistic idea, whether a thing is de- 
manded or not, provided labor be expended upon it, no such con- 
tingency as risk or loss is contemplated as being necessary, and 
hence no reason exists for the entrepreneur or profit-maker, and 
no acknowledgment is made by the socialist that society makes 
any gain by having all its industries begun and all its machinery 
of industry introduced at the private risk and loss of the same, 
pi'ofit-making class which derives the dividends from capital in 
its successful ventures. Hence, also, socialism denounces all 
profit as a deduction from the just wages of labor, all profit- 
makers as robbers of labor, and all speculators as criminals. 

37. Karl Marx's Tlieory of Value.— The notions of 



KABL MARX. 8D 

Marx,* though elaborated with detailed complexity of statement, 
may all be resolved into the single proposition that as labor cre- 
ates all wealth the laborer ought to own all wealth, relieving 
society of the capitalist as a superfluity in the industrial system. 
His first sentence is : 

"The wealth of a community in which the capitalist mode of 
pi-oduction prevails appears as an immense collection of com- 
modities, the single commodity being its elementary form." 

To be exact, Marx should have defined not what wealth ' ' ap- 
pears as," but what it is. It is true that wealth " appears as " com- 
modities, but it "is '' the power its owner has, by means of those 
conmiodities, to command the services and products of man and 
the forces of nature. This conception connotes and implies that 
there must be others who, not having the wealth, are in that 
state of need, or want, or poverty which causes the command to be 
obeyed from a sense of interest, in order to get the commodity 
whose possession by one competent to use it is wealth, not in the 
commodity, but in its owner. 

By thus defining what wealth appears to be, viz., a physical 
object, and not wliat it is, viz. , a social power, Marx avoids bring- 
ing into view the fact that wealth is not an absolute but a relative 
fact, inconceivable except as the antithesis to the opposite idea of 
the need of wealth or the want of the commodity for use and 
consumption. Those possessing it ai-e indebted for the power it 
confers to the fact that those lacking it have need. This relativ- 
ity in the idea of wealth, whereby want becomes the opposite 
phase of the same fact and essential to its conception, will easily 
be grasped by reflecting how long one would have to wait to get 
his boots blacked by another person if every other jDerson had 
the wealth of a Vanderbilt. Again Marx says : 

"It is thus only the quantity of socially necessary labor, or 
the socially necessary time of labor for the establishing of a use 
value [meaning the creation of a commodity] which regulates its 
extent of value." 

This statement involves one juggle, or unnoticed substitution 
of one source for value in place of anothei", and one mistake of 
a consequence for a cause. If labor alone were the cause of 
value, then whatever a man worked at would be valuable in pro- 
portion to the labor spent ujDon it. It would need no other con- 



*" Capital ; A Criticism of Political Economy." The extracts are given as trans- 
lated by John Broadhouse in To-day. 



90 ECONOMIC PHIL080PHT. 

dition. When Marx prefixes to labor, however, the quahfication 
"socially necessary" he really undermines labor as the sole 
cause of value, or as any cause, and sets up a difiPerent and 
wholly adverse cause, viz., the demand or desire of society. As 
these two factors, viz., the "labor invested in an article " and 
the " social demand for the article," stand in no relation to each 
other, except as the social demand for the article may cause labor 
to be invested in it, to say that social demand causes value is to 
admit that labor is not the cause of any value, since if social de- 
mand can cause the value, it can intensify or slacken without the 
least regard to how much or whether any labor is invested in 
the article, and as the social demand intensifies or slackens, the 
article must rise or fall in exchange value. 

This juggle reveals the substitution by Marx of the consequence 
in place of the cause. For if social demand regulates value, it 
will also regulate profits and losses, which are the excess or defi- 
ciency of value over or under cost of production. But whatever 
regulates profits must regulate the quantity of labor which will 
be devoted or expended in the production of that from which the 
profit is obtained, as it is only the profit-maker who will or can 
employ mere naked labor, viz., labor as divested of implements, 
means of support, capital, organization, or job, at all. Hence 
Marx's effort, to make value depend on quantity of labor expended, 
is pregnant with an admission which makes human desire to be 
both the cause of value and the regulator of the quantity of labor 
w^hich will be expended, in every branch of production, while the 
profit-maker, as a steerer of labor in accordance with social 
demand, looms up as the one worker whose service is of all 
others the most socially necessary. 

At the outset, Karl Marx's aphorism might be met by the coun- 
ter proposition that as wealth is the power to command all pro- 
ducts of labor, all forms of service, and all the productive forces 
of nature, it becomes, so far as one possesses it, a dispensation 
from labor. Indeed, it is in order to relieve himself from labor 
that the laborer strives to get wealth. If he had actually got it 
in the quantity required to make hini comfortable both as to the 
present and the future, he would cease to labor. Thus the reali- 
zation of the Karl Marx gospel, that the laborer should own all 
wealth, would instantly abolish the function of Avealth itself, for 
that which all possessed, in a degree equal to the desires of each, 
would no longer command the services of any. And in a state of 
things in which none could command a single human service, ex- 



ERROR PRODUCING UNREASON. 91 

cept his own, all would be paupers, and the condition barbarism. 
The process of reasoning by which Karl Marx begins with Ri- 
cardo, and ends with thuggism, is this: 

(1.) All wealth is in commodities. 

(2.) A commodity is a product of human labor socially neces- 
sary, and thei'efore having value in exchange. 

(3.) The value in the product is proportionate to the quantity 
of socially necessary labor, or socially necessary time of labor, 
spent in producing it. 

(4.) The interposition of capital, or of the entrepreneur, to em- 
ploy labor, is not " socially necessary labor," but is only a privi- 
lege of deducting and appropriating half the product of all so- 
cially necessary labor without rendering any part of the service. 

(5.) Hence, the employment of labor by the capitalist or entre- 
preneur is in all cases a robbery of labor to the extent of the whole 
share won by the capitalist as profits. 

(6.) When capitalists are eliminated, commodities will exchange 
against each other according to the quantity of socially neces- 
sary time of labor involved in them, and the unit of money and 
standard of values will be the certificate of associated labor, that 
the bearer has performed an hour or a day of labor, which certifi- 
cate will supersede gold and silver as money, remain always at 
par with commodities, put an end to speculation, profits, interest, 
and all the oppressions of capital, and make it possible for every- 
body to get what he wants by tendering to associated labor an 
equivalent, in his own time, to that expended in producing the 
thing he wants, drawing his cei'tificate, and forwarding it as a 
draft on the producer. Thus the elimination of capitalists will 
bring in the millennium ! All of this^is economic madness. If, 
as in the case of the seven anarchists at Chicago, this madness 
takes the form of attempted revolt agaiiast society, the plea in de- 
fence which would best consist with the facts, and at the same 
time with legal principles, would be that they become socially in- 
sane by attempting to handle social problems to whose right ap- 
prehension they are unequal. 

38. Why Men Exchange. — Some forms of wealth have no 
function but to be consumed, and their economic use in any 
other way than as the subject of exchange consumes them di- 
rectly. Such are food, clothing, such raw materials as undergo a 
change of structure in manufacture, fuel, drink, and, according 
to the form of statement adopted by Carey and others, labor, or 
rather labor-time, which, if not purchased at the instant it exists, 



92 ECONOMIC PHILOSOPHY. 

perishes forever.* Other forms of wealth are neither perishable 
nor enjoyable, except in an indirect and secondary way, and are 
only consumable by wear and tear in their use, over long periods, 
as means of creating, distributing, transpoi'ting, or transform- 
ing commodities. Such are all roads and the means of transpor- 
tation over them, all mills and factories and their macliineiy, all 
ships and vessels, land used for farming, residence, mining, or 
busmess-blocks for rental, the shares and stocks, debts, and se- 
curities to which these give rise, and all property held and used 
because of its power to aid man in the pi'oduction of wealth. 

Two ]3rinciples concei'ning value have much to do with giving 
rise to this distinction between the two kinds of wealth, viz., 
consumable wealth and reproductive wealth. f These are: 

(1.) Of any one kind of consumable wealth a man's capacity to 
make a pleasurable personal use is limited by nature with great 
rigidity, while his capacity by aids of various kinds to produce 
this kind of consumable wealth is almost unlimited. 

(2.) The portion of consumable wealtli which he can produce 
above his own power to consume, (called his mai-ket product or 
surplus), would have no utility could he not find some person who 
needs it and is able to give a return service in exchange for it. 
This ability, and desire, to give a return service, is economic want 
or effective demand. In consequence of these four facts, viz. , the 
limit on his own consuming power, the absence of limit on his 
producing power, the inutility of his own surplus to himself, and, 

* Careij ("Unity of Law," p. 184) saj's : " Of all commodities or things the only one that 
disappears on the instant of its production is labor-power or human force, mental or 
material. If not instantly utilized, it passes away, lost forever." 

We have already shown, ante p. 85, that, if used as well as if not used, the laboi-power, 
considered with reference to its capacity of containing value, also passes away, into the 
commodity or product to which it gives its value. So that, whether used or not, labor- 
power never contains in itself value, since it is not a thing in esse, but iu jMtuisse. 
When done, it is iu the commodity, and in the wages. Until then it is not. 

iProf. HenvT/ SidgwicksaysQ'PrmciyileBol Pol.'Econ..'" 8Q):''Th'\3 . . . showstheneed 
of a broad distinction between the two portions of a country's material wealth, which 
we may distinguish as consumer's wealth and producer's wealth respectively. By con- 
sumer's wealth I mean such material things as, like the consumable services before dis- 
tinguished, are directly available for satisfying human needs and desires. Producer's 
wealth and, similarly, of course, producer's services being only useful indirectly as a 
means of obtaining the former." 

Jevons ("Theory of Pol . Econ.," p. 43) says : " The theory of economics must be given 
with a correct theory of consumption. Lord Lauderdale says the great and important 
step towards asccrtainino- the causes of the direction which industry takes in nations 
seems to be the discovery of what dictates the proposition of demand for the various 
articles which are produced. . . We labor to produce with sole object of consuming." 



WEALTH IS SOCIAL. 93 

the fact that another person exists who will effectively demand 
the surplus, giving- an exchange surplus of his own production 
for it, it comes to be a law of value (1) that all surplus products of 
human industry have value to their producer only as he can for- 
ward them to the point of economic need, and (2) that such pro- 
ducts reward their producer, or rise in value, in the degree that 
they are forwarded to the jDoint of greatest economic need or most 
effective demand. This tendency of values to decline unless com- 
modities are exchanged, and to advance as they approach the 
point of effective demand, which is always the point of final con- 
sumption, is the cause of exchange. But while a man's capacity 
to consume any one form of directly enjoyable wealth, such as 
food, clothing, and shelter, is rigidly limited by nature, his capac- 
ity to multii^ly his secondary or social wants, so as to extend his 
social power by acquiring custody over those forms of imperish- 
able or very slowly consumable wealth, such as residences, parks, 
equipages, pictures, statuary, libraries, diainonds, lands, means of 
transportation and manufacture, machinery, etc., the use of which 
must in their nature be shared with society in order to be profit- 
able to himself, is without limit. Tliis results in a division of all 
values into three chief kinds, viz. : wealth directly and quickly 
consumable in sustaining life ; wealth very slowly consumable in 
ostentation, a mode of consumption in which the possessor neces- 
saiilj^ shares his enjoyment with a smaller or larger segment of 
society ; and reproductive wealth, of which society has the use and 
the owner only the income. The kinds of wealth of which man 
has an unlimited faculty of acquisition, corresponding to his un- 
limited power of production, are therefore more and more so- 
ciallj^ consumable, and less and less individually consumable, the 
larger his wealth becomes and the further it is removed from 
mere sustentation. In plain words, the more he gets, above his 
bread and butter, the less eatable his wealth becomes, and the 
more he is compelled, by the nature of the wealth he acquires, to 
give its actual use to society, while he retains toward it only a re- 
lation of supervision and government. By this constitution of 
man's natui'e, he is furnished with an unlimited capacity, both for 
producing and acquiring wealth, Avithout being able to materially 
increase the quantity which he can permanently deduct from the 
general stock for his individual consumption. He may obtain 
the mastery of many relations toward his fellow men, and of 
many social powers, but the profit he can make out of tliem de- 
pends on the degree in which he shall subordinate all to the one 



94 ECONOMIC PHILOSOPHY. 

cliief, unconscious and instinctive purpose of society, viz., to for- 
ward all enjoyably consumable wealth, from, the point where it 
exists in surplus and satiety, to the point where most economic re- 
turn eflPort is being made to obtain it, and where, therefore, there 
is most effective demand for it. This, tlierefore, may be named 
semi-social Wealth. The economic facts or forces, in commodities 
and services, which thus compel their distribution among con- 
sumers, are the fall of values with satiety, and their rise with 
desire, acting upon the human instinct of gain or sense of value. 

39. The Theory of Value. — Prof. Jevons regards Hermann 
Heinrich Gossen as having been the first (in 1848) to treat economics 
as a theory of Pleasure and Pain, being the theory of the j)ro- 
cedure by which each individual, and the aggregate of individ- 
uals constituting society, attain the maximum of pleasure with 
the minimum of painful effort. 

Gossen* states, as the law which compels man to find his high- 
est pleasure in a change of pleasures, or in variety, that in- 
ci-ease of the same kind of consumption yields pleasure, contin- 
ually diminishing up to the point of satiety — [at which point, he 
might have added, it begins to yield pain, continually increasing 
up to the point of destruction]. 

He classifies useful objects (wealth), as, (1) those which possess 
pleasure-giving powers in themselves, (styled in the present treat- 
ise enjoyable wealth, or by Prof. Sidgwick consumer's wealth) ; 

(2) those which only possess those powers when in combination 
with other objects, (styled in this work ostentatious wealth) ; and 

(3) those which only serve as means toward the prodviction of 
pleasure-giving objects, (styled by Prof. Sidgwick "producer's 
wealth," in this work reproductive wealth, or semi-social 
wealth).! 

* " Entwickeliing der Gesetze des Menschlichen Verkehrs, nnd der daraus fliessenden 
Regeln fiir menschliches Handcln." ("Development of the Laws of Human Commerce 
and of the Consequent Rules of Human Action.") 

t Senior (Encyclopedia Metropolitana, Art. Political Economy, p. 133) had already 
stated the Law of Variety in human requirements from its economic side, as Fourier 
had done from its philosophic side " The i.ecessarios of life are so few and simple 
that a man is soon eatisfled in regard to these and desires to extend his range of en- 
joyment. His first object is to vary his food; but there soon arises the desire of 
variety and elegance in dress ; and to this succeeds tlie desire to build, to ornament, 
and to furnish, tastes which, where they exist, are insatiable, and increase with every 
improvement in civilization." 

T. B. Banfield, of Cambridge, in lectures on the organization of labor, in 1844, said : 
" The first proposition of the Theory of Consumption is that the mVwJ action of evenj 
lower want in the scale creates a desire of a higher character. If ihe higher desire es- 



UTILITIES FLUCTUATE. 



Starting from these bases, Prof. Jevons says, the utility of all 
objects to any one person is not a constant quantity, but declines 
as satiety is reached, decreasing as the quantity increases, until 
it becomes a disability or a mischief. Water, in its totality, is 
the favorite example of a useful substance. To a thirsting trav- 
eler a glassful may mean rescue from death. A deluge would be 
death itself. A- single meal to a hungry man has great utility. 
A second meal has none to him, but will have as much as tlie 
previous one in five hours. Dividing the quantity of food a per- 
son will consume in twenty-four hours into ten equal parts, if 
his food be reduced by the last part he will suffer but little ; if by 
the second tenth, he will feel the want distinctly ; the third tenth 
will be injurious. When half is reached only time is required to 
complete his starvation. If each of these tenths be called an in- 
crement, their utility varies in the order indicated in the diagram., 
Xjroceeding from right to left. 

Another and more 
practical mode of stat- 
ing this variation of 
utilities with supply 
had been made by Dr. 
Davenant or Gregory 
King'*' in an essay on 
the balance of trade, 
as follows : 

"We take it that a 
defect in the harvest may raise the price of corn in the following 
proportions : 



15 U 13 12 U 10 9 8 7 6 5 4 3 2 1 



Defect 

1 Tenth 

2 Tenths 

3 Tenths 

4 Tenths 

5 Tenths 



Raises 
the Price 



f Above the Common Rate 

3 Tenths, 

8 Tenths, 
' 1 and 6 Tenths, 

2 and 8 Tenths, 
^ 4 and 5 Tenths. 



isted previous to the satisfaction of the primary want, it becomes more intense when 
the Slitter is removed. The removal of a primary want commonly awakens the sense of 
more than one secondary privation. Thus a full supply of ordinary food not only ex- 
cites to delicacy in eating but awakens attention to clothing. The highest grade in the 
scale of wants, that of pleasure derived from the beauties of nature ijnd art, is usually 
confined to men who are exempt from all the lower privations. Thus the demand for 
and the consumption of objects of refined enjoyment has its lever in the facility with 
which the primary wants are satisfied. This, therefore, is the key to the true theory of 
value. Without relative values, in the objects to the acquirement of which we dir<;ct our 
power, there would be no foundation for political economy as a science." 

* Cited in "Theory of Political Economy," by Jevons, p. 168. 



96 ECONOMIC PHILOSOPHY. 

So that when corn rises to treble the common rate it may be pre- 
sumed that we want' above one-third of tlie common produce ; 
and if we should want five-tenths, or half the common produce, 
the price would rise to near five times the common rate." 

Thornton* doubts the accuracy of this estimate, but Tookej 
and Chalmers % both approve or confirm it. Toolse says the price 
of corn has repeatedly risen from one hundred to two hundred 
per cent, when the utmost computed deficiency of the crop has 
not been more than one-sixth to one-third of an average. Chal- 
mers says ' ' the necessaries of life are far more powerfully af- 
fected in the price of them by a variation in their quantity than 
are the luxuries of life. Let the crop of grain be deficient by 
one-third in its usual amount, or rather let the supply of grain in 
the market, whether from the home produce or by importation, 
be curtailed to the same extent, and this will create a much 
greater addition than of one-third to the price of it." This 
theory has been fully sustained by facts. 

Henry C. Carey shows[§ that a crop of cotton six times as large 
in tlie year 1840 as in the year 1815 brought but little more than 
the crop of 1815, and not enough more to pay for the added cost 
of transportation. 

The agricultural reports publislied by our government show 
that seven leading crops in the United States in a scant year, 
1881, sold for more money than the same seven crops in the abun- 
dant year, 1880. Crops which were less by 710,678,007 bushels 
sold for $127,688,623 more because of their diminislied quantity. || 

Tooke estimates** that in 1795 and 1796 the farmers of England 
gained seven millions sterling, in each year, by a deficiency of 
one-eighth part in the wheat crop, not including the considerable 
profit on the rise of price of other agricultural produce. In each 
of the years 1799 and 1800, again, farmers probably gained eleven 
millions sterling by deficiency (Jevons' ' ' Theory of Political 
Economy," p. 172). 

Prof. Jevons' statement, of the decline of utilities with satiety, 
needs to be supplemented with the statement that the utility re- 
turns as the article is forwarded from tlie person to whom it rep- 



* " Inquiry into Nature and Effects of the Paper Credit of Great Britain," p. 370-271. 

t " History of Prices," vol. i., pp. 13-15 t 

t" Christian and Economic Polity of a Nation," vol. ii., p. 280. 

§ " Harmony of Interests." || Lecture by Ilom-y Carey Baird in Brooklyn. 

** •' History of Prices." 



THE SURPLUS INCOMMODES. 



9* 



EV 



resents a sui'plus, drug, nuisance, or, as Jevoiis calls it, a discom- 
modity, to the i^erson whom it will com- 
mode, and to Avliom it is a commodity. g 

A farmer in Dakota can consume for 

his own personal food six bushels of 

wheat per year, for that of his family 30 

bushels, and for that of all his servaiits 

and as seed 2,000 bushels ; but he can 

produce 200,000 bushels. In the absence 

of a market 198,000 bushels would drop 

in value in the manner indicated by line 

BC, Ax indicating tlie utility of the first 

6, Dy of the next 30, and Ez of the next 

2,000 bushels, which is far beyond the 

limit of personal utility, since a few 

quarts may suffice as seed for planting, 

had he no market. The 198,000 bushels, in the absence of a 

market, would have so small a utility that they would not have 

been pix)duced at all. 

Meanwhile, however, there is a point, viz. , Lowell, or Lynn, in 

Massachusetts, where shoes are being made in surplus, the utilities 

of which sink with like rapid- 
ity, say in all for Lynn 14,000,- 
000 pairs for a population capa- 
ble of wearing 1,000,000 pairs 
per annum. Of this 1,000,000 
pairs, the utility declines rap- 
idly, as the last 250,000 pairs 
are by no means so necessary 
as the first. The decline in im- 
mediate utility in the absence 
of a market might be as follows : 
The utility of the 13.000,000 
pairs which the people of Lynn, 
in the absence of a market or ef- 
fective demand, could only lay 
by as a supply for 13 future 
years, would be so small that it 

would not have sufficed to induce their production. 
By distributing, however, the 13,000,000 pairs among 3,000,000 

persons each pair takes on a utility equal to that which the fli'st 

1,000,000 pairs find to the people of Lynn, i. e., their utility rises 







7~ 




■^/ 












^ / 






^ / 






ei:/ 
















It , 




















^ ' 










^/' 










V, / 










o / 










e. / 










'^ / 










iS 












/ 

( 
1 


V; 

1 

1 




r 


-.0 








§ 


c=L 



















ECONOMIC PHILOSOPHY. 



to the point of indisi^ensable necessity. This rise, however, re- 
quires lapse of time, changes of place, and several changes of 
ownership. Hence the final utility is established and known as 
being equal, for the entire 13,000,000 paix'S, to the utility which 
the first 250,000 pairs needed for present wear would have had 
to the people of Lynn, the moment it is known that a population 
exists anywhere which will make a return of effort in supplies 
of wheat equal to that made by the Lynn people in supplying 
shoes. But this final utility takes the form of added value, only 
with each step of service whereby the shoes are expedited toward 
their consumers, where alone the maximum of final utility and 
value is restored. The movement forward, of the two surpluses, 
shoes and Avheat, may be illustrated and the values they acquire 
may be shown thus : 



Wheat. 



Line of nltimate utility asstiTPii hy exchange 
on both wheat and shoes. 



'"v; 



■mt- 



Of 






'M 



fis 



5 2 \ 



n 









Dakota. 



A^^. 



\^ 



^■^!:-' 



AA"' 



,^-^' 



OV-" 



e^€ 



,e^5 



c^?-^ 



•>*J 



Shoes. 



^e'^-, 



^^o; 









**( 



^ o 



^•^^oS; 



St. Paul. 



Chicago. 



Cleveland. 



Lynn. 



Prof. Jevons will seem, to some persons, to qualify his doctrine 
that value is not caused by labor, by the following statement (P. 178, 
"Theory of Pol. Econ.") : " But though labor is never the cause 
of value, it is in a large proportion of cases the determining cir- 
cumstance, and in the following way : Value depends solely on 
the final degi^ee of utility.* How can we vary tliis degree of util- 
ity ? By having more or less of the commodity to consume. t 
And how shall we get more or less of it ? By spending more or 
less labor in obtaining a supply. According to this view, then, 
there are two steps between labor and value. Labor affects sup- 
ply, and supply affects the degree of utility which governs value, 



*7. e., the utility or degree of effective demand which an article has to its con- 
sumer, i. e., what return he will make to obtain it. 
t/. e., to increase its quantity, and therefore to lower its value. 



MUCn LABOR LOWERS VALUE. 99 

or the rate of exchange. In order that there may be no possible 
mistake about this all-important series of relations, I will restate 
it ill tabular form as follows: 

Cost of production determines supply, 
Supply determines final degree of utility, 
Final degree of utility determines value." 

It is evident, however, that cost of production determines sup- 
ply, in the sense that as cost of production diminishes the supply 
increases ; that supply determines final degree of utility (or con- 
sumer's value), in the sense that as su^jply increases the value to 
the consumer lessens ; and heiice that looking at the question as 
Jevons here does, with I'eference to the eff^ect that collective (not 
individual) labor has on the value of collective commodities, it 
leads to'the conclusion that the greater the quantity of labor ap- 
plied to their production the more they decline in value. This, 
however, makes labor a regulator of value, as Jevons says, but 
£)nly as a reducer of value, whereas the Smith-Ricardo-Marx doc- 
trine sought to make labor only, always, and proportionately the 
source of rise in values. What seems, at fii-st, a qualification of 
Jevons' dissent to the theory which bases value on labor, becomes, 
on analysis, a statement that labor is often a destroyer of value. 

40. Markets Are the Index of Values. — The aggregate of 
all the demands for an article being the criterion which deter- 
mines how much of it can be sold, and the aggregate of all the 
sources of supply determining in like manner how much of it can 
be purchased, it becomes important that those who have the 
article to sell and those who have it to buy should all meet in a 
common spot, so that the most rajiid communication may be had 
between each buyer and every seller, until that buyer who will 
pay more or buy more than any other buyer, and that seller 
who will sell more or take less than any other seller, shall meet 
face to face. The rate at which these two interchange is the mar- 
ket or current price. Numerous other transactions may occur, 
but they Avill be above and below the market.* 



♦Even in the earliest and simplest conditions of trade, markets, fairs, and bazars tend 
to establish themselves as the means of satisfying each buyer and seller that he is buy- 
ing as cheap, or selling as dear, as the ratio of the supply to the demand admits. 
Throughout most parts of Central Africa the travelers find fairs conducted largely by 
women. In Asia and primitive Europe they are held everywhere except where great 
towns with ample stores of goods of every kind have superseded the fair by furnishing 
a more varied and better form of market. Indeed, the periodical fair is the natural 
predecessor of the market town. The Eastern and Michaelmas fairs at Leipsic, and of 



100 EGONOMIG PHILOSOPHY. 

It is a singular fact that markets have been the subject of pop- 
ular prejudice and moral objection, almost in proportion to the 
perfection with which they economize time, transportation, and 
effort and equalize prices. The projier meaning of a mai'ket is 
not mei-ely the place set apart, in which buyers and sellers may 
meet with their goods, but all that territory, with its groups of 
buyers and sellers, consumers and producers, of which the resi- 
dents are so brought into union and contact with each other, by 
the mutual intelligence which arises through reciprocal com- 
merce, that one price is arrived at by all with facility and prompt- 
itude. *t A market rises into its highest efficiency and value 

Frankfurt on the Main in Germany, of Keachta in Siberia and Nishni Novgorod in 
Russia, of Zurzach in Switzerland, Pesth in Hungary, Bergamo in Lombardy, tin cattle 
fairs of the Scottish Highlands still have a wide celebrity. The great Lortdon, Paris, 
Berlin, New York, and Philadelphia world's expositions of products are stimulated by 
the same motive on the part of exhibitors. Though they make no sales, their object is 
sales by sample so far as manufacturers and merchants are concerned. In all cities 
the dealers in certain commodities by a common instinct of buyers and sellers concen- 
trate in certain streets, as banking and brokerage make a money market of Lombard 
Street, London, and Wall Street, New^York. The swamp in New York is the traditional 
market of the leather trade. When the wholesale dry goods trade removed in 1857 9 
from Pearl and Front streets to Park Place, Warren and Chambers streets, real prop- 
erty in the former " dry goods market " fell to one-tenth its former rental, until it be- 
came the oil market, when it revived. The bonnet trade of New York formerly cen- 
tred in Division Street so exclusively that it was difficult to buy elsewhere. The book 
trade in all cities has its own center, the lumber trade another, and even the prof es- 
sions concentrate in one spot, seeking equality with competitors, and the other advan- 
tages incident to a market, as the law trade in London centers at The Inns of Court, etc. 

* Cmirnot ("Recherches stir les Principes Mathematiques de la Theorie des Richesses," 
Paris, 1838, p. 55) says: "On sait queleseconomistes, entendent parmarche. non pas un 
lieu determine on se consomment les achats et les vents, mais tout in terriioire dont 
les parties sont unies par des rapports de libra commerce, en sorte que les p rix s'yni- 
vellent avec facilite et promptitude." 

tJewws ("Theory of Pol. Econ.,"92) says: "In economics we may usefully adopt this 
term with a clear and well-defined meaning. By a market I shall mean two or more 
persons dealing in two or more commodities, whose stocks of those commodities and 
intentions of exchanging are known to all. It is also essential that the rates of ex- 
change between any two persons should be known to all the others. It is only so far 
as this community of knowledge extends that the market extends. Any persons who 
are not acquainted at the moment with the prevailing rates of exchange, or whose 
stocks are not available for want of communication, must not be considered part of the 
market. Secret or unknown stocks of a commodity must also be considered beyond 
reach of a market so long as they remain secret and unknown. Every individual must 
be considered as exchanging from a pure regard to his own requirements or private in- 
terests, and there must be perfectly free competition, so that any one will exchange 
with any one else for the sligrhtest apparent advantage. There must be no conspira- 
cies for absorbing and holding supplies to produce unnatural ratios of exchange. Were 
a conspiracy of farmers to withhold all corn from market, tlie consumers might be 
driven by starvation to pay prices bearing no proper relation to the existing supplies, 
and the ordinary conditions of the market would thus be overthrown.'" 



A PERFECT MARKET. 101 

when it concentrates into one focus so large a jjortion of the buy- 
ers and sellers of a certain commodity as to become, in conjunc- 
tion with one or two otlier markets of the same kind, an authori- 
tative standard of prices of the articles in which it deals, for all 
buj^ers and sellers throughout the world. By aid of the quick 
intelligence which the telegraph supplies and of the swift trans- 
portation which steam affords, the whole world is thus converted 
into one market, having one price, subject only to cost of trans- 
portation of the product between the point for which the price is 
quoted and all other points. Such mar-kets are the Bourse of 
Paris, for stocks and securities, the London Stock Exchange as 
well as the London Produce Exchange, the Liverpool and New 
York Cotton Exchanges, the New York Stock Exchange, Pro- 
duce Exchange and Eeal Estate Exchange, and formerly the Gold 
Room and the Boards of Trade (Grain and Provision Exchange) 
of Chicago, in conjunction with those of the other Western cities 
and that of Liverpool. 

Concerning these exchanges Prof. Jevons says : ' ' The theoreti- 
cal conception of a perfect market is more or less completely car- 
ried out in practice. It is the work of brokers in any extensive 
market to organize exchanges so that every purchase shall be 
made with the most thorough acquaintance with the conditions of 
the trade. Each broker strives to gain the best knowledge of the 
conditions of the supply and demand and the earliest intimation 
of any change. He is in communication with as many other 
traders as possible, in order to have the widest range of informa- 
tion and the greatest chance of making suitable exchanges. It is 
only thus that a definite market price can be ascertained at every 
moment, and varied according to the frequent news'^ capable of 
affecting buyers and sellers. By the mediation of a body of 
brokers a complete consensus is established, and the stock of 
every seller or the demand of every buyer brought into the mar- 
ket. It is of the very essence of trade to have wide and constant 
information. A market, then, is theoretically perfect only when 
all traders have perfect knowledge of the conditions of supply 
and demand and the consequent ratio of exchange; and in such 
a market, as we shall now see, there can only be one ratio of« ex- 
changet of one uniform commodity^ at any moment. 

* It is notable that this news never relates to the labor cost of producing the commod' 
ity, as it should if the theory is correct which is contended by Adam Smith, Mill, 
Ricardo, and Karl Marx, though it does relate always to the cost of reproducing it at the 
present moment, or more properly to the extent of supply and demand, 
t Meaning price. ^Usually called ' ' grade of goods." 



102 ECONOMIC PHILOSOPHY. 

A market, in tlie broadest sense, is therefore a place where the 
facts relating to supply and demand are converted, through an at- 
trition of human intelligence and interest, into prices; in short, it 
is a price mill. 

41. Freedom in Establishing Prices. —Whether trade can, 
in these markets of exchange, with advantage to any class or to 
the cause of business integrity and virtue, be restricted by legisla- 
tures, and whether these restrictions can be profitably and bene- 
ficially administered by courts, has been the subject of much 
controversy. Boards of trade usually establish a sj^stem of arbi- 
tration, or of courts within themselves, which are more satisfac- 
tory to their own members than the exterior courts of justice of the 
state, both because of their greater promptness and of their nicer 
familiai'ity with the class of questions arising in the transactions 
of the board. To the extent of the j)owers of such boards or 
markets, therefore, all appeal ^by members to the courts of law is 
discouraged.* 

An extensive opinion prevails, however, that the offense 
anciently known as forestalling, and now known as " cornering 
the market, " can with prudence, and ought in sound morals, to be 
forbidden by law, and restrained or punished by the courts. 
This is an economic question, at the bottom, since the morale 
or ethics of the transaction depends on whether the public and 
general mterest is promoted by leaving men perfectly free to 
trade as they will, or by an interference of the state in restraint 
of this freedom. 

The grain ti'ade, wherever carried on extensively, involves es- 
sentially at least eleven parties, viz. , (1) the farmer who raises the 
crop, and first sells it to the buying agent of the dealer, on the 
Board of Trade, or commission man; (2) the buying agent; (3) 
the dealer on the board or consignee ; (4) the railroad or carrier 
who brings the grain itself to market ; (5) the inspector or officer, 
jointly appointed by the city and the Board of Trade to receive 
the grain when it arrives, inspect it on its way from the car or ' 
boat in which it is brought into the bin where it is to be stored 
or "warehoused," who assigns it judicially its proper grade 
according to quality, and thereupon orders it into the proper bin, 
where it is usually blended, but may not be, with other grain of 
like grade, and who also issues the gi'ain certificate to the con- 



* This eeems to have obtained from a very early date, as the petty markets of pied- 
pmid7e in England testify. 



DEALING ON THE BOARD. 103 

signee of the grain as for a given quantity, say 10,000 bushels (or 
100,000), of "Michigan white wheat" or Minnesota No. 1, or 
Kansas No. 3, as the case may be, stored in Iowa Elevator A, in 
a bin designated by i^roper marks. This grain certificate is there- 
upon the proper evidence of title to the grain, and is the thing 
bought or sold on the board, as a substitute for the grain, when- 
ever grain is sold by grade, though grain may still be sold by 
sample, as well as by grade ; (6) the warehouseman, who is a 
peculiar kind of a bailee or storer merely, and has no title, but 
only custody for the Board ; (7) the Board of Trade or aggregate 
mass of buyers and sellers being virtually the market, on which 
the grain is offered and which is in close monetary communica- 
tion with all other centers of supply and demand; (8) the seller of 
the grain certificate ; (9) the buyer or buyers ; (10) the purchaser for 
shipment or consumption ; (11) the miller, baker, or manufacturer 
in the Eastern States or Europe who orders the purchase gener- 
ally, sometimes in advance, and awaits the arrival of the 
grain. 

Supposing the Board opened, the holders of grain, and the holders 
of money for investment in grain, necessarily form two parties, 
the former wanting grain to go up, the latter wanting it to go 
down. Those who have sold grain, agreeing to deliver it at a time 
stated, and have not yet got the grain for delivery, want grain to 
go down, so that they can fill their contract below the rate at which 
they have agreed to deliver. Those who have bought grain agree- 
ing to take it at a future date at a stated price, wish it "may go 
above that price, so that they may reap the difference. The former 
are beai's ; the latter are bulls. The former have ' ' sold short ;" the 
latter have "gone long." 

Three independent economies exist in the practice of buying 
and selling for future delivery, say one, two, or three months 
ahead, which could not be effected by buying grain on hand and 
taking present delivery. 

i^iVst— Buyers for consumption, millers, exporters, and foreign 
pui'chasers can, through these, convert a future unknown price 
into a known price, so far as is necessary to enable them to base 
future contracts for production thereon. Suppose a manufac- 
turer of cotton goods or iron, feeding his own men, as indirectly 
he does, and obliged to estimate the rate at which he can afford to 
take oi'dere according to the rate at which he can buy bread and 
pi'ovisions, it is plain that he could "figure" the rate at which he 
could take ordei-s more closely if he could make certain his own 



104 ECONOMIC PHILOSOPHY. 

future rate of expenditure on his supplies of food and provisions. 
This he could do by buying in August, deliverable in October. 

Secondly. — Precisely as buying in a wide market equalizes 
prices over a wide area of country and enables millions of persons 
to produce the same product in close competition with each other, 
so buying for a considerable period of time, or * 'going long" spreads 
and equalizes over a long period of tims the changes in price 
which are made inevitable by natural causes, such as war, 
drought, flood, great or small harvests, and the like. Equaliza- 
tion of prices over time is as essential to steady production as equal- 
ization of prices over wide areas, and numerous groups of produc- 
ers and consumers. If a rise of 20 cents per bushel in wheat is 
made necessary by an impending war between two grain -grow- 
ing countries, and if one buyer knows it three months ahead, and 
buys his supply at an advance of two cents per bushel, he not 
only saves his own supply but he brings the market two points 
nearer where it ought to be, and thus serves millions of produc- 
ers and consumers who are interested in the rise being both early 
and gradual, not late and spasmodic. 

Thirdly. — Such "futures" originate with buyers, since if no one 
wished to buy ahead no one could sell futures. Each buyer pays 
a margin on his contract, sufficient to secure the seller against 
loss in event of a fall in price and no delivery. The futures run 
in links from the consumer back to the producer. In such cases 
they cause a current of advance payments to set in from the 
dealers in the futures or purchasers. 

This is in effect a movement of money in advance from the 
consumers, or their reiDresentatives on the Board of Trade, to and 
among the producers. Farmers are thus enabled to get advances 
on their grain and planters on their cotton, whereby the harvest- 
ing is virtually done with the capital advanced by the consumers. 
This converts articles like cotton and wheat, for which prices are 
established by "futures" into "cash" articles, or articles on 
which long advances ai'e had, whereas cotton goods, furniture, 
and manufactured articles are sold so invariably on long credits 
that even " cash " means thirty days after delivery. 

43. Cornering- the Market. — Conceding that the economies «» 
of the trade compel dealing in futures, let us now analyze the 
working of a corner. A corner in grain occurs when a merchant 
or a clique of merchants have bought up so many of their fellow 
merchants' conti'acts for future delivery, and at the same time liave 
gained control of so much of the grain actually in mai'ket, that 



DEALING IN ' ' FUTURES. " 105 

those who have made the contracts are unable to buy at the price 
stipulated, when the grain is deliverable. The cornered mer- 
chants must pay, to the clique, the difference between the price 
named in the contract and the price current at the time set for 
delivery. The corner could be prevented by confining the pur- 
chase and sale of grain to that in sight, or, in other words, by 
prohibiting a deakr from selling, or agi'eeing to sell, what he has 
not yet purchased. 

It can not always be known, until the contest is over, whether 
one party is trying to corner the market, or the other to break it. 
A purchaser may begin buying, to protect a price at which he has 
already bought and desires to sell. He may believe, as Mr. Keene 
did in 1879, that a wet season in England would send wheat up 
from $1.05 to $1.35. In August he buys 500,000 bushels, deliver- 
able in October at $1.10. Having once agreed to take this quan- 
tity at this rate, he does not want the price depressed below that 
rate, and believes that whoever tries it will lose their mouey, if 
met with both money and courage. He therefore buys all the 
wheat offered for October at $1.10. He can not always distin- 
guish between the effect of his own purchases to run up the mar- 
ket and the effect of English dampness. When he has bought 
1 5, 000, 000 bushels he would have all the wheat the elevators in Chi- 
cago would hold, if he were buying for present delivery. But as 
he is buying for October delivery, the sales can be manufactured 
on him as often as there is a party with courage and the margin. 
Buying at prices ranging from $1.10 to $1.35, he has one chance 
of gain and two chances of loss. His two chances of loss are (1) 
that so much wheat deliverable in October may be poui^ed in on 
him, and the certaintj^ of English dampness not affecting the 
price in the degree he had expected may become so apparent, that 
either from loss of courage or lack of money he may be com- 
pelled before October to allow the market to break, in which case 
it falls to perhaps 90 cents, and he has lost the difference be- 
tween the prices he paid and 90 cents. He may have this luck 
when he is right in his judgment, and when October comes the 
price may be $1.35, unless he also has the courage and the money 
to hold the market against the bears. (2) His second chance of 
loss is that, in bujdng to sustain his price, he may have much 
" cash wheat " on hand which he must sell out at a decline. His 
one chance of profit is that, if his judgment was coiTect, he will ' 
have only sent up the market in advance, to the point where the 
ratio of supply to demand would have comjjelled it sooner or 



106 ECONOMIC PHILOSOPHY. 

later to go, with the advantage that he will reap as profit the rise 
on all he has bought. 

In the case of the Keene wheat deal of 1879, the result showed 
that he operated against the true and proper course of the mar- 
ket, by underestimating the capacity of the American supply 
and overestimating the potency of the English deficienc;^ By 
expanding the Ameiican export of wheat from 152,075,000 bush- 
els m 1878-9 to 176,426,000 bushels in 1879-80, and our export of 
corn from 79,431,000 bushels to 103,450,000 bushels, with a like in- 
crease from India and elsewhere, the deficiency was filled with- 
out any serious rise in price. 

In 1881 tlie New York legislature ordered an investigation of 
the causes of the extraordinary rise in prices in Chicago and ces- 
sation of shipments of wheat eastward and to Europe. 

Railway managers of high repute testified that the difficulty 
was due to gambling in futures on the Chicago Board. The facts, 
when fully sifted, showed that the Board of Trade was right and 
wise in preventing the export of wheat necessary for our own 
consumption, and which, if we had sent abroad, we must have 
brought back at a still greater advance. The total corn crop of 
the United States had fallen from 1,754,861,535 bushels in 1880 to 
1,194,916,000 bushels in 1881, a decline of 559,945,535 bushels, or 
more than five times the amount of our export in 1880. Our 
wheat crop in the same year had fallen from 459,479,505 bushels 
in 1880, according to the census, to 380,280,000 bushels in 1881, 
according to Bradstreefs. Here was a decline in production of 
79,199,505 bushels in wheat, while our export of wheat in 18"80 
had been 159,264,214 bushels. The market was maintained in 
its equilibrium by .sending abroad only 118,000,000 bushels in 
1881, for which the American farmers received at the place of 
production $1.19 per bushel, whereas for the larger crop of 1880 
the farmers got* only 95 cents, and for that of 1882 onij" $1.03. 
The amount saved, to the farmers, by the superior sagacity of the 
Board of Trade over that of their critics, was in this instance 
$28,320,000, or twice the sum involved in the so-called Alabama 
claims, the peaceful adjustment of which through the Geneva 
arbitration and award is justly i-egarded as one of the triumphs 
of national economy as well as of international diplomacy. 

A temptation is afforded, by the system of dealing in 
futures in the gx'ain market, to those who have no means of 

* According to Mr. Niramo, statisticiaa of the Department of Agriculture, Washing- 
ington, D. C. 



MAKING PRICES. 107 

basing their ventures on any calculations or reasons connected 
with supply and demand, and whose purchases and sales are 
made upon no principle, and with no insight into the condition 
of the market or the facts which should influence prices. To 
such persons the buying- and selling- of futures becomes a 
mode of gambling as blind and reckless as betting on cards would 
be. The mistake has been made, however, of making the 
gravamen of the evil to consist in dealing in futures, whereas the 
real fact which marks their dealing as gambling is not that they 
do not get a physical delivery of the grain they buy, but that 
they do not get an intellectual conception of any reasons or 
motives which should justify buying. To bet in the dark on the 
prospective changes of prices, in an article of whose supply and 
demand they know nothing, is mere gambling, while to buy in 
anticipation and intelligent forethought of causes which make 
the thing purchased worth more than the money paid for it is 
mere prudence. 

43. How Prices Are Made. — Economists have used the 
term natural value to express the value which they think a com- 
modity possesses by reason of the labor spent in producing it ; 
intrinsic value, to express the permanent value a commodity has 
when measured in the average of other commodities, or in com- 
parison with a sufficiently large number of commodities to com- 
prise a standard more trustworthy than gold or silver coin or 
other money ; and money value, or price, to express the value a 
commodity has in money. So far as money rises and falls, in its 
purchasing power, by reason of causes relating to its own volume, 
the price, or money value, ceases to accurately measure intrinsic 
value. But the disturbances in the value of money being slow, 
and often concealed far below the surface of things, do not appear 
in the ordinary markets of merchandise. In them price passes 
for value, as if the two were identical. What all men assume 
without thinking has, m certain ways, the potency of truth, even 
if they all think wrong. Hence prices, rather than values, be- 
come the immediate force that impels trade. Buyers seek the 
largest mai'kets they can reach to get the lowest prices, and sellers 
seek the largest markets they can to get the highest prices. 
Markets thus become the manufactory of a price, on each commod- 
ity in which they deal, which rules all transactions in that commod- 
ity. The price is the index of demand, and the magnet of supply. 
The price, by pointing out each new direction of the demand, rules 
production. If the price of peas is higher, relatively to oats, farm- 



108 ECONOMIC PHILOSOPHT. 

ers drop oats and raise peas. If women wear Jerseys and Jerseys 
are made of worsted, wool-dealers express the change by a rise in 
worsted wools, and farmers meet the change by changing their 
short, fine-wooled merinoes for sheep that produce a longer wool. 
Thus price regulates production, and points out the changes 
which different articles undergo, in their relative utility, accord^ 
ingly as they begin, or cease, to please the human taste. The 
phrase, ' ' There can be but one price in one market, " depends for 
its truth, on our defining the term market to mean that area over 
which but one price rules, at one time, or over which all minds 
are in direct communication. Hence wide markets imply wide 
equality of terms, i. e. , that great numbers of persons shall be 
enabled to buy and sell at one price. This equality is sought 
by all dealers and insures promptness in trading, thus saving 
time and chaffering. For, as s oon as one who desires to buy 
knows he is getting his article at the lowest price obtainable, he 
buys. Till then he waits. The lack of a known price is a paral- 
ysis upon commerce, and through that upon production. Hence 
the prompt fixation of prices, the wide acceptance of their 
authority by producers and consumers, and prompt trading by 
many millions of peoj)le, is as important a time-saving, and labor- 
saving service, as is that pex^formed by steam engines and railway 
trains. In the more remote African fau^s, according to Stanley,- 
the buyers meet to inspect and chaffer, and perhaps continue this 
for days before beginning to buy and sell. The most advanced 
and useful markets are those whose prices are most widely 
authoritative. In grain these are the Chicago, Liverpool and 
New York Boards of Trade or Produce Exchanges. In stocks 
and shares it is the London and New York Stock Exchanges and 
the Paris Bourse. The instant a price is made at either of these, 
buyers and sellers, all over the world, deal in accordance with it. 
If each dealer had to wait until he himself could learn the causes 
which influence demand and supply commerce would be paral- 
yzed. Every manufactory must use power. A manufactory of 
prices involves a use of two powers : intelligence combined with 
courage,and money or credit. There are in every such prioe-mill 
two parties, one of which, the "bears," have made such contracts 
tliat they will gain if prices fall and lose if they rise. Another, 
the "bulls," is interested in having the market price go up. All the 
capital in the business divides itself between these two jjarties. The 
battle between the two contending forces is like a fight between 
two armies. Some are wounded in it ; some are slain. But it 



EQUIVALENCE IN VALUE. 109 

decides the price not merely for that spot but for millions deal- 
ing elsewhere. 

In the sale of carriages, pianos, jewelry, clothing, and other 
things which do not admit of such an authoritative contest over 
the price, there is great inequality in the prices at which two 
persons, in the same city, on the same day, may buy two things of 
the same kind, and of equal value. Hence there is great cheat- 
ing ill such trading. One may pay $200 for a watch which 
another buys for $100. There is no standard. In all these 
grades of goods long credits must be given, as the dealers must 
hold the goods until they reach consumers. But in articles dealt 
in by produce exchanges the price is advanced to the producer, 
and his crop can always be sold if he desires, even before it is har- 
vested. Hence the authoritative manufacture of prices confers 
somewhat the same benefit on a community as is conferred by an 
authoritative sj^stem of law, religion, manners, and ethics. It en- 
ables every man to know, each moment, how he stands relatively 
to the results of his past exertions, what they have cost, and 
how much he can get for them. 

It is easy to exaggerate the notion that exchanges of commodi- 
ties indicate equivalent values in the things exchanged. When 
Esau sold his birthright to Jacob for a mess of pottage, when 
Judas sold his Saviour to his enemies for 30 pieces of silver, and 
when Benedict Arnold sold his honor and his patriotism as an 
American for a commission in the British army, when Bacon sold 
his integrity as a judge — in all these cases there was an exchange, 
but not an equivalence of value. Men may sell what it is un- 
profitable for them to sell at any price, buy what would be dear 
if they got it gratis, and so make unprofitable exchanges as easily 
as unprofitable investments, employments, or experiments. The 
naked fact, that an exchange occurs, determines no more whether 
it is profitable, than the naked fact, that production occurs, deter- 
mines whether the product is worth more than the cost. Yet a 
presumption arises in favor of a continuing stream of exchanges, 
or productions, that both are profitable, as a presumption arises 
that the point to which water flows is lower than its fountain. 
In this sense, price becomes a presumption of equity and eco- 
nomic fair dealing, as between all who sell and all who buy. 

In our chax)ters on labor we shall endeavor to show that this 
princix)le of equitable exchange underlies the ordinary sales of 
labor to an employer for wages, of the use of money to a bor- 
rower for interest, of the use of land to a tenant for rent, and of 



110 ECONOMIC PHILOSOPHY. 

the use of capital to those who labor. In all these cases it will be 
found that there is an essentially equitable division, between the 
several concurring- agents in production, of the entire earnings 
derived from their joint concurrence in proportion to their share 
in producing. In this sense every service, that is paid for, becomes 
a commodity to him who buys it. The price at which he buys it is 
the mean between two competitions, viz. , the competition between 
all the producers of the commodity desiring to sell, and all de- 
sirers of the commodity seeking to buy. The competition 
between the sellers fixes the lowest price at which he may have 
to buy. The competition between the buyers fixes the highest 
price at which he can possibly sell. Where these meet is price. 
Price is the sum at which those holding commodities can better 
afford to forego the commodity, and take the money that is of- 
fered, and at which those who hold the money can better forego 
the money and take the commodity. The former compares the 
other uses he can make of both commodity and money, and be- 
lieves he can make a profit by taking the money. The latter 
makes the same comparison, and believes the commodity is worth 
more to him. If all men were absolutely wise, all exchanges 
would be absolutely profitable. As it is, the best thing that is 
true of prices is that they are the highest .expression at once of 
human liberty and social order. In no act of life does choice so 
largely enter, and yet in none are we so peremptorily compelled to 
choose. On this chain, of freely chosen acts of will, is hung the 
commerce of the world. 

44. Errors Concerning Causes of Prices. — A common er- 
ror concerning prices is that they are fixed by looking backward 
at cost of production ; that each successive participant or purchaser 
has only to add his ordinary profit to what he buys to get it ; and 
hence the prices of exchanged goods are enhanced according to 
the number of the ixiiddle men through whose hands they pass. 
In fact, however, prices are always determined by looking for- 
ward at the possibilities of sale, not backward at the cost of 
production. From the consumer back to the producer, each 
dealer sees only the ' ' inch before his nose " to the price he can 
get. He buys with reference to that price. In this way the 
sense of value is educated backward along the line, and the 
quantity unsold rises or falls, not according to its cost of produc- 
tion, but according to what the last purchaser paid. Profits can 
not be obtained by adding to price, but must be carved out of 
price in advance by economic bargains concerning wages, rent, 



SPLITTING DIFFERENCES 3IAKES PRICES. Ill 

interest, cost of raw materials, and other elements of production. 
The effort thus to carve out profits in advance from these several 
sources, as well as to obtain them through cheaxjer processes and 
wider mai'kets, has caused many employers to feel, with Ricardo, 
that, in practice, profits are the leavings of wages, though in 
theory profits are the cause of wages. The former is the superficial 
and practical, the latter the ultimate and iDliilosophic view. 

To get a nearer view of the mode in which price is adjusted, 
suppose a man is fishing from the shoi'e with a hook and line, 
without either boat or net; and, thus equipped, he can catch 20 lbs. 
of fish a day. If he is fishing for amusement and not for profit, 
he does not covet boat or net. But if he desires to sell his 
fish, and boat or net is offered to him, he asks by ho^v much will 
the boat increase his catch. He finds that thereby he can take 
200 lbs. with the boat ; with the net 1,000 lbs. Now if there is 
only a present and near market for the 20 lbs. which he can catch 
with his hook and line, neither boat nor net has any value to 
him whatever, because of the absence of demand, whicli is the 
ultimate and first cause of all value. If there is a market for 200 
lbs. and no more, then boat and net are of equal value to him. 
But if there is a present demand for 1,000 lbs., then the net is 
worth five times as much to him as the boat, and the boat ten 
times as much as the hook and line. Should he pay all his 
increased catch, however, both boat and net would still be of no 
value to him. How much Avill he pay ? If there are plenty of 
other boats and nets, and he alone wants them, he represents the 
sole demand against an ample supply. This would make his 
rent of the boat or net nearly gratuitous. Each owner would 
offer his net or boat at the highest rate he thought would be low 
enough to prevent his going elsewhere. If there were no other 
net or boats, and many other seekers, the boat would be offered 
to him only at a rate higher than any other seeker would pay for 
it. If the next seeker would j)ay 800 lbs. of fish, out of the 1,000 
caught, then he must pay somewhere between 800 lbs. and the 
whole. If tlie motive, and the necessity, to both parties, to enter 
into the trade, wei'e equal, the price would be 900 lbs. Thus in 
each stage of the bargaining there is an equal division, not of the 
entire catch, but of the difference between the share of the catch 
which each can obtain by dealing with the other, and the lesser 
share he can get by dealing with the next best outside person. 
The competitive price, therefore, is the final mean arrived at by 
splitting the difference between the highest sum any known 



112 ECONOMIC PHILOSOPHY. 

purchaser will pay and the lowest sum for which any known 
seller will sell, the seller having in view the relative advantage 
to him of the price rather than the commodity, and the buyer 
having in view the relative advantage to him of the commodity 
rather than the price. In this sense the term price covers the 
consideration for which every exchange is made, whether of 
money for goods, money for service, for use of land, or for use 
of money. 

In attempting to arrive at the influence of causes of any kind 
upon prices, no source of fallacious reasoning leads to so many 
prominent errors as the mistaking of a partial, secondary or ut- 
terly impotent factor, for the one decisive and controlling factor. 
Thus, in many English discussions of the influence of protection 
upon prices, we find free use made of the inequalities in the 
prices, of grain in Great Britain in the period from 1810 to 1825, 
accompanied by the assumption that these great inequalities are 
obviously due to the British duties on the importation of foreign 
grain, and without stopping to inquire wliether as great and like 
fluctuations did not occur at precisely the same periods in France, 
Germany, the United States, and all other countries from which 
England could have obtained her supply.* 

It will be seen by the chart of average prices,tduring the sev- 
eral years, that the average of 1817 was 96s., and that the average 
price in 1813 had been 109s., while in 1812 the average price had 
been 126s., and in 1801 it had been 120s., and the fluctuatious in 
these prices in Prance and in the United States in the same years 
were identical with those in England. 

In these discussions no mention is made of the war between the 
allied powers and France, under Napoleon, the latter aided in 

* Thus Mongredien in his " History of the Free Trade Movement in England," p. 5, 
sayS: "This Corn Law, which was enacted in 1823, under Lord Liverpool's adminis- 
tration, was bad enough, since it gave the landlords a monopoly of the wheat trade up 
to 70 shillings per quarter, and afforded no effectual relief till the price reached 85 shil- 
lings. It was, however, rather less stringent than that which preceded it, for that 
totally prohibited the importation of foreign wheat until the current price in England 
had reached 80 shillings per quarter. That price for wheat meant something like Is. M 
per quartern loaf. 

" This earlier Corn Law had been passed in 1815, and no wonder that at the time of its 
being enacted popular indignation was excited to its utmost. Riotous assemblages had 
to be dispersed by armed force, and the House of Commons itself had to be protected 
by the soldiery, when the third reading of the bill was voted by a large majority. This 
harsh measure, which took from the nation to give to a class, soon produced its inevit- 
able results. Two or three deficient harvests successively occurrei; and the price of 
wheat rose to 103s. per quarter in December, 1816, to 104s. in January, and to 112s. 8rf. 
in June, 1817. +For chart see p. 1,24. 



WAB AND PRICES. 113 

1813-15 by the United States, of the vast quantities of debts and 
issues of credit money incident to these wars, or of the many 
circumstances which were potential in sending- prices of bread- 
stuffs as high in the United States, France, and Germany as they 
were in Enghmd. The accompanying chart of fluctuations in 
price in England, America and France shows that they were as 
great in the latter as in the former and occurred at the same 
periods. 

A. like tendency is manifest, among writers on free trade and 
protection, when dwelling on the period from 1860 to 1870 in the 
United States, to attribute solely to protective duties, a range of 
prices which were more largely due to the deprivation of the cot- 
ton supply, the increased demand for woolen clothing, the in- 
crease of railway building, the expansion in the volume of the 
currency and the debt, and the variations in price insepai'able 
from such causes, than to the immediate operation of tariff duties 
on imports. 

45. Tooke on Pi'ices. — The wars between France and the 
allied powers (1795 to 1815), and the twenty years following, 
were marked by such remarkable variations in prices, as to cause 
a wide and voluminous discussion of the causes of prices in 
pamphlets and books. The results of this discussion ai*e embodied 
in Tooke's "History of Prices," which, more than any other 
English economic work, is marked by the inductive method, and 
proceeds from observation to theory. 

The alleged causes of fluctuation in price, to which Tooke's in- 
vestigations were chiefly dii'ected, were (1) the wars, (2) good and 
bad farming seasons, as affected chiefly by the weather, and (3) the 
currency, as affected by increased or diminished volume of coin 
or paper. 

Tooke concludes, after comparing prices during a long series of 
successive intervals of war and peace, that mere war, unaccom- 
panied by any changes in the volume of money, does not tend to 
raise i^rices, except in the line of military supplies and naval 
stores, for which in peace there is hardly any demand. He con- 
cludes that as war does not increase the consumption of food or 
clothing, since the soldiers consume no more of either in the field 
than they would at home, it can only enhance prices by lessen- 
ing the supply, by withdi-awing the workers who produce them, 
and expending their force in fighting, fortifications, and other 
unproductive labor. He says :* "As to the supposed extra de- 

"Tooke on Prices," Part ii., p. 40. 



114 . ECONOMIC PHILOSOPHY. 

mand arising out of the war, the effective demand must be lim- 
ited by the means of payment, and the stimulus or excitement 
arising out of a state of war cannot supply any extra means of 
payment except by previous course of production." We do not 
concur in this statement, but hold that, instead of effective de- 
mand being limited by means of payment, the means of payment 
will be multiplied, and especially will be made to circulate more 
rapidly, to adapt them to the effective demand. When Secretary 
Chase, in 1861, tried to get a loan of $50,000,000 from the New 
York bankers, and they declined to lend it, and so the govern- 
ment was without means of payment, this, so long as it lasted, 
limited the effective demand for guns and uniforms. But when 
he told them he would issue government notes, until, instead of 
borrowing money from them, they would have to run their banks 
on his money, this shows how the effective demand for means of 
payment calls them into existence as it does all other commodi- 
ties. All modern wars cause a large manufacture of ' ' means of 
payment," and hence supi^ly the cause of rising prices. But, in a 
war in which no increase in the quantity of money of any sort 
occurs, the diminished production might be the chief cause tend- 
ing to enhance prices. Yet it would be difficult to imagine a war 
in which there would be no greater rapidity in the movements of 
money than in peace ; and, of course, if a given volume of money 
circulated so rapidly as to be the means of making more pay- 
ments than before, this increase in rapidity of circulation would 
have the same effect on prices as an increase in its volume or 
quantity. 

Tooke repudiates, so explicitly, the notion that cost of produc- 
tion regulates price ; that it is remarkable that economists should 
have disregarded his position. He says,* "that the cost of pro- 
duction can not be considered in the case of corn, and indeed of 
most other kinds of raw produce, as a cause determining actual 
or immediate market prices ; that the cost of production in 
nearly all cases relating to the grain produce of this country, and 
still more as regards the produce of other countries, is an un- 
known or unascertained quantity ; and the only mode in which 
it can be considered operative on prices is when, as a result of 
a course of years, market prices are found to be unremunerative 
to those growers, at home and abi'oad, who, in point of soil, 
climate, and situation, are least favorably situated ; under such 

* " History of Prices," vol. v., p. 23~. 



SCARCITY CREATING WEALTH. . 115 

circumstances, the cultivation, so far as those are concerned, will 
be discontinued. So, on the other hand, if prices for some length 
of time be more tlian ordinarily remunerative, there will be an 
extension of the area of cultivation, and, according to the degree 
or proportion in which these causes of diminished or extended 
cultivation may be supposed to opei'ate on the total of the sources 
of supply, will be the greater or less influence on the ultimate 
range of jji-ices." 

In short, cost of production only affects prices when it becomes 
so high, I'elatively to the price which demand creates, as to cause 
those sources of production, which can not afford to produce at 
that price, to stop producing altogether, thus diminishing the 
supply. But in this case it is not the cessation of production that 
affects the price, but it is the price that causes the cessation of 
production. 

46. Prices Rise in Disproportion to Scarcity. — Tooke 
confirmed, by actual facts the theory of Gregory King that a 
decided deficiency of supply, especially in the case of breadstuffs 
(corn), is attended with an advance in price very much greater 
than the degree of the deficiency. The effect of this is to make 
the years in which the smallest agricultural crops are produced 
the most profitable to the agriculturist, and they bring him the 
largest returns, thereby supplying him with a profit on his 
capital which stimulates him to the largest possible production 
the next year, and so tends to bring on those years of abund- 
ance which bring relief to the food consumers, but debt and 
distress to the farmers. King had stated the ratio of increase of 
price to scarcity of crop as follows : 





Above the 


common rate 


A defect of 1 tenth, 

2 tenths 

3 " 

4 " 

5 " 


raises the 
price 


^ 


3 tenths 

8 " 
1.6 " 
2.8 " 
4.5 " 



So that a deficit of one-third would treble the common price, 
and a deficit of one-half would raise it five-fold. 

The vei*y singular result which this rule, if true, would involve, 
is thus stated by Mr. Tooke* : "If the advance in price, from 
deficiency, increase the aggregate value of the smaller quantity, 
in some instances, to double or more than double the amount in 

* " Thoughts on Prices," p. 99, 



116 ECONOMIC PHILOSOPHY. 

money wliich tlie larger or average quantity would have pro- 
duced, the fall in price from abundance may reduce the value 
in money of tlie larger, or more than average quantity, to a sum 
considerably less than the smaller would have produced. Thus, 
suppose that, with bad or scanty crops, the produce of all sorts of 
corn were 28,000,000 of quarters, which, one kind with another, 
fetched 60s. per quarter, or £84,000,000 ; and that, upon the full 
restoration of the ordinary produce, or 32,000,000 quarters, the 
price fell to the average rate of 40s., the 32,000,000 of quarters 
would be worth only £64,000,000, or less by £20,000,000 than the 
smaller quantity had been worth. In the same case, by the same 
sort of interior arithmetic by which the £20,000,000 additional, 
paid by the consumers to the producei's of corn, had been con- 
sidered as the creation of so much wealth, the mere cessation of 
that payment, by the restoration of an average quantity of prod- 
uce, would be considered as the destruction of so much national 
capital. " 

This notion that scarcity of production might be an increase of 
capital, and abundance of production might work a diminution 
of wealth, would seem frightful to Bastiat, and to all who hold 
that glut can not be poverty, and scarcity can not profit the 
consumer. 

But Mr. Tooke applied the test to several periods. He found 
that in 1799, the deficiency as stated from the best data, in a 
Report of Committee to the House of Commons, was less than one- 
fourth as to wheat, and still less as to other grains, the average 
crop being 8,000,000 quarters. Yet the actual rise in price of prod- 
uce by the deficiency was from 50s. 3d. to 104s. 4(i. average for 
the whole ci^op. 

8,000,000 of quarters at 50s. 3d - - - £20,100,000 
6,000,000 " " 104s. 4d. - - - 31,300,000 

Here was a gross profit to the farmers of £11,000,000, by reason 
of being deficient 2,000,000 quarters on their wheat crop alone. 
But as the other food crops are double the value usually of the 
wheat crop, but were affected by a like rise in price, Mr. Tooke esti- 
mated the gross profit to the farmers on all at £33,000,000. One 
mark of an extension of cultivation, at this period, was an increase 
in the number of inclosure bills or acts of Parliament for inclos- 
ing land previously common. These bills rose from 63 in 1799 
to 122 in 1801. 

In 1617, with an average crop, the price had been 43s. 2>d. (aver- 



PERMANENT AND TEMPORARY CHEAPNESS. 117 

age). But in 1620-'31 abundant crops caused the price to fall to 
27s. As the result, Mr. Tooke shows, the whole crop went off at 
such a sacrifice that the farmers were generally unable to pay 
any rents at all, and the greatest suffering and distress prevailed 
throughout the farming jjopulations. 

Mr. Tooke finds that the enormous prices which attended En- 
gland's contest with Napoleon, and made the farmers rich, were 
not due so much to the wars, or even to the inflation which 
attended them, as to the bad seasons. "In 20 years, from 1793 
to 1812, included, there were 11 years of greater or less deficiency 
of produce, with long and severe winters." 

Similar facts were shown by Henry C. Carey concerning our 
cotton crop, and Henry Carey Baird has pointed out that the 
short grain crop of 1881 brought to the farmers of the United 
States $25,000,000 more _than it could have brought had it net 
been 700,000,000 bushels less than the average crop. 

47. Permanent and Temporary Cheapness. — Cheap- 
ness in the sources of supply is more important, to every pur- 
chaser or purchasing counti'y, than cheapness in the actual supply 
at any moment. The tendei^cy of agricultural prices, in bad 
years, to rise to a point which would make the short crop more 
profitable than the average crop, and so furnish the farmers with 
a larger capital, and better inducement to plant largely the next 
year, acted as a stimulus to English, Irish, and Scotch farming, 
until the repeal of the corn laws withdrew protection against 
foreign competition from the British farmers in 1846 to 1819. 
Short crops would be followed by such increased planting, and 
dear meats by such increased cattle rearing, that, though the 
population never increased in so rapid a ratio, in the three king- 
doms, as from 1780 to 1846, the farmei'S kept even pace with the 
consumers. There was no impairment of the permanent sources 
of supply. It was expressly to j)revent this remuneration of the 
farmers in bad seasons, through a rise in the price of corn, that 
the duties on corn were repealed. They so attained the desired 
result that, after 1846, bad seasons to the farmers have not been 
attended by compensating prices.* 

* Thus Broderick (" English Land and English Landlords," p. 273) says : "The 
agricultural distress of the year 1879-'80 will long be memorable in tbe economical 
records of the country, and may probably be remembered as marking a crisis in the 
history of the English land system. lis most obvious and principal cause was the oc- 
currence of several bad seasons in succession, culminating in the coldest, wettest and 
least genial spring and summer that had been known within living memory. But this 



1 1 8 ECONOMIC PHILOSOPHY. 

On the contrary, each succession of bad seasons has effected a 
permanent displacement of British in favor of foreign farmers, as 
the ordinary sources of suj)ply to the British peoi)le. The aggre- 
gate value of farm products, not including groceries, liquors and 
luxuries for the table, imported in Great Britain, quadrupled in 
20 years, rising from £24,359,598 in 1859, to £95,996,249 in 1878, 
while the value per head of population had more than trebled, 
rising from 17s. to £2 16s. lOd. This,[^of course, implies that 
British cultivators are not only receding from furnishing a part 
of the supplies which they formerly furnished, but that they are 
furnishing a smaller aggregate value. The experiment of free 
importation of breadstuffs in Great Britain, therefore, is that of 
getting an immediately cheaper supply of corn, by demolishing 
their domestic sources of supply. 

The actual cheapening in the price of breadstuffs in conse. 
quence of the repeal was both so transient in duration and so 
small in amount as utterly to falsify the predictions on which the 
measure was passed.* It is possible, indeed, by selecting pecuMar 
periods, before and after the repeal, to seem to show that the repeal 
lowered the price by a third, or did not lower it at all, but raised 

calamity was greatly aggravated as regards the interest of farmers, though mitigated 
as regards those of the public, by a singularly low range of agricultural prices, as well 
as by a general sense of insecurity due to a vast expansion of foreign competition. 

% 

*Brode7'icJc, in " English Land and English Landlords,'' p. 292, says : " When the 

Corn Laws were repealed, it was never anticipated that agricultural prices could rise to 
their present level, and many rents were fixed upon the assumption that wheat in fu- 
ture would command an average price of 40s. per quarter; barley, 30s. ; oats, 20s. ; wool, 
Is. per pound; and butter, lOrf. or Is. per pound, no account being taken of milk, for 
which the demand was then infinitely less than it now is." 

S/iadivell, in " System of Pol. Econ.," p. 499, says : " When the Corn Laws were re- 
pealed, the farnners did not cease to obtain remunerative prices for their produce, 
though they did to some extent abandon corn-growing in favor of pasture. This change 
was carried out to so large an extent in Ireland as to produce most serious conse- 
quences, and free trade may be justly charged with the great depopulation of that is- 
land which has taken place during the last thirty years. The Corn Laws placed so 
great an impediment in the way of the importation of foreign corn that they held out a 
great inducement to grow it in every part of the United Kingdom; and Ireland, which 
is better fitted for a pastoral country, was by their operation converted into an agricul- 
tural one. Agriculture requires that a much larger number of laborers should reside 
upon the land than is necessary in pastoral industry, and thus the effect of the Corn 
Laws was to cause that remarkable increase in the population of Ireland which con- 
tinued as long as they were in force. When they were repealed, agriculture in its turn 
gave way-to pasture, and the population of Ireland rapidly diminished. The potato 
blieht and its consequent famine were the occasion of the commencement of the de- 
population, but such a temporary disaster can not have been the cause of what con- 
tinued long after the occasion had passed away. If, then, depopulation is to be con- 
sidered an evil, free trade has certainly inflicted an evil on Ireland ; but it must be re- 



AVERAGE PRICES OF WHEAT IN ENGLAND. IN 



SHILLINGS, PER QUARTER (OF 8 BUSHELS), BEFORE AND AFTER THE REPEAL OF PRO- 
TECTIVE DUTIES ON CORN IN 1846-9. 




. The doUed line marks the decline of acrease 
Tho .r"!*"^''"" '™°> ^'^v from 3,750,000 acres in 1852, lu h.^m.^uk, <iw;-» ■•;,.--'„,;„„ fr5m 1 
Britnin " ''T *'"■':'> "1^ cultivation of breadstuffg receded in eacli of the 10 ?«";?; "oi 

""lain OXCeDt four nnr1 nhn„t cn„cnnr1 tv,„ un»l-n o^rnncjp nmnfirl hv the Dul^e OF ui i"" 



Great Britain, as estimated by McCuUoch and Caird, between 1853 and 18G8, at 100,000 
— „nr, acres of net decline in 16 years, or 81,063 acres per year. 



„„^ ...,„..„.u. u..„.,„ „, ...=a2e in cultivation of wheat ■""' ^'^s^^'mo acres ^ 

TOtes per section line, viz.. from 3.750,000 acres in 1852, to 2.453,000 acres '" ?™°' , ,rS,n']853 to 1868, exceeded in acreage the estates of either of the landholders of Gr 



except four, and about equalled the entire acreage owned by the Duki 



INFLUENCE OF FREE CORN ON PRICE. 119 

it slightly. Thus if one average be struck for the 48 years from 
1800 to 1848, the ante-repeal price is inflated by the high prices 
incident to the wars with Napoleon from 1800 to 1815, the ave- 
rage being 70s. Zd. per quarter, as against 51s. 10c?. for the 30 
years from 1849 to 1879. Yet there was but one year between 
1819 and 1846, viz., 1839, when corn rose to this supposed avei^age, 
whereas after 1846 its average rose above 70s. in 1854 and 1855, 
and stood at 69s. 2d. in 1856, thus presenting three successive 
years, in the first decade of free importation, in which the average 
price rose above the jirice it had maintained in any year (but one) 
of the seventeen years preceding repeal. The average price, how- 
ever, for the eleven years 1837 to 1847, both inclusive, was 51s. 
5d., while that for the eleven years 1847 to 1857, inclusive, was 
47s. 3(i. But if the five years preceding the repeal be compared 
with the eleven years following, the result will indicate an actual 
rise in prices. The average for the five years preceding 1846 was 
54s. 11 2-5cZ. In 1846 it was 54s. 8d., and for the eleven years 
following 1846 it was 55s. 5 l-4cZ., or 8d. higher for the eleven 
years after the repeal than for the five years before it. In 1847 
the average pi-ice was 69s. 9d., in 1848 it was 50s. 6cZ., in 1849 it 
was 44s. 3d., in 1850 it was 40s. StZ., and in 1851, at 38s. M., five 
years after the repeal, it touched for the first time a lower point 
than it had reached in 1835 (39s. 4d.), eleven years before the re- 
peal. These facts clearly show that the repeal was an extremely 
secondary influence in reducing the price, if it can be conceded 
to have reduced it at all. It does not compare as an influence with 
a good season or an increased acreage. 

Owing to the fact that statistics of acreage planted were not 
kept by the government until 1862, the decline in acreage of cul- 
tivation must be partly matter of estimate. If it should appear 
that the land from which cultivation of breadstufPs receded, or to 
which it failed to extend with growth of population, would, if it 
had continued to be cultivated to those crops, have produced a 
quantity equal to the increased quantity of breadstufi^s imported,* 

membered that but for protection the population of the country n^ould never have in- 
creased to such a height as it did, and that if free trade had always been [in operation 
no diminution would have taken place. The iucrease in the numbers of the people was 
no p^eat benefit to them, for, as is well known, the greater part of them were in a 
state of chronic and abject poverty. The diminution of the population of Ireland has 
been accompanied by a larger increase in that of England and Scotland, so that the ef- 
fect of free trade has been to attract people to the 'Sistricts where they could live in 
greatest comfort. 

* The article on Corn Trade in the 0th edition of "Encyclopedia Britannica," quoting 
from Mr. McCulloch's article in its 8th edition, presents the facts in a manner which, 



120 ECONOMIC PHILOSOPHY. 

and in addition tliat the average price since the rejjeal has not 
really been lower than it would have been had cultivation con- 
tinued on these lands by reason of continued protection to the 
farmer, it would follow that the British i^eople had transferred 
their source of supply to foreign countries without cheapening 
their supply. It may be fairly contended to be a principle con- 
cerning prices that when cheapness, in the supply of the product, 
is temporarily obtained by means which extinguish, or make very 
much dearer or more precarious, the permanent means of produc- 
ing that same product the tempoi-ary cheapness will prove to be 
an ultimate dearness. 



though not intended to concede that the repeal was a failure, does still show that 
enough land was withdrawn from cultivation to have produced the quantity of wheat 
imported, Rearranging the statements in our own form they contain the following 
facts: In the twenty years following the repeal of the corn laws, the production of 
wheat in Ireland and Scotland fell off one-half. As the acreage in Ireland in 1853, 
seven years after the repeal, was still, as stated by McCulloch, 400,000 acres, the 
falling off of one-half in Ireland was of at least 500,000 acres. And as Scotland is set 
down by McCulloch as having fallen off one-half, but as having still 350,000 acres in 
wheat in 1852-3, the Scotch falling off was 350,000 acres. England, says McCulloch, 
diminished in wheat 280,000 acres, in oats 450,000, in beans and peas 320,000. Ireland 
diminished also in barley and oats one-sixth. Without countmg the decline in produc- 
tion in oats, beans, and peas, except ia England, though such a decline occurred in 
both Scotland and Ireland, here is a total decline in the acreage planted to wheat and 
its equivalents of 1,900,000 acres. This is one-half as much as the total area planted to 
wheat alone in Great Britain in 1874, and is one-sixth the total area planted to grain of 
all kinds in Great Britain in 1881. Thirty bushels per acre is a low average estimate 
on cereals for Great Britain. Hence this decline in acreage represents a diminution in 
annual food supply of at least 57,000,000 bushels, whereas the average annual importa- 
tion from the years 1849 to 1859 was 80,000,000 bushels. Now, if we add to the diminu- 
tion in the food supply by decline of cultivation, namely, 57,000,000 bushels, the aver- 
age importation of wheat, barley, oats, and flour anterior to 1846, which is given by 
the "Encyclopedia Britannica" at 28,000,000 bushels, the total is 81,000,000 bushels, 
thus showing that the consumers of breadstufls got essentially the same supply af- 
ter as before the repeal of the duty on corn, the increase in the importation being 
exactly equal to the decline in the domestic production. 

Eyndman, "flistorical Basis of Socialism," p. 388, quotes "Sir James Caird, Sir 
John Lawes, Lord Leicester, Mr. Boyd Kinnear, and other skilled agriculturists as 
estimating that at least twice the quantity of food could be profitably grown in En- 
gland to-day that is now grown." On p. 328 he says : "Moreover, during the last 
few years, the farmers themselves have been, in many cases, paying away their capital 
in rent, taxes, tithe, interest, and insurances, whilst the soil has deteriorated, and the 
amount of live-stock has decreased. The actual diminution of wealth has been most 
serious. Between 1872 and 1882 the acreage sown with wheat, barley, oats, and pota- 
toes in England, Wales, and Scotland, f«ll from 9,183,600 to 8,403,000 acres ; between 
1874 and 1882 the number of cattle decreased by 320,000 head, and the number of sheep 
dwindled from 30,300,000 to 24,300,000, a reduction of one-fifth, or 6,000,000. This 
means urimistakeablc impoverishment of the agricultural interest. At the very time, 
in fact, when more and more labor should bo employed to make up for the injury 
caused by bad seasons, the farmers are nearly bankrupt." 



HELATION OF PRICES TO FREEDOM. 121 

48. Relation of Prices to Freedom. — One of Mr. Carey's 
" general truths " is that prices of raw materials and of finished 
products approach eacli other in proportion to the diversification 
of industries, the abundance with which money circulates, the 
activity of the societary movement, and the growth of human 
freedom. They certainly meet at the factory where the raw ma- 
terials ai'e converted into the manufactured goods, and where the 
only difference between them is the cost and jn'oflts of manufac- 
ture. The measure of man's growth in freedom, however, can be 
arrived at more nearly by inquiring the price of his time per 
day or per year than the condition of prices as to the commodity 
he produces. A farmer in Dakota may be producing the raw ma- 
terial, wheat, at a cost of 12 cents per bushel and selling it at the 
low rate of 60 cents. But if he is producing it in such quantity 
that the difference of 48 cents per bushel, between his cost of pro- 
duction and his selling price, ai^plies to 1,000,000 bushels a year, 
then his time for the year is worth to him $480,000, notwithstand- 
ing he is producing a " raw material," and at a very great dis- 
tance from the point of its consumption. His growth in freedom 
seems to be solely proportionate to the value of his time, or his 
rate of earnings for the year, and not at all proportionate to 
whetlier he is near or distant from the point where prices of raw 
materials and of finished products approximate. 

Nor can it be truly said that societjjr attains to a higher average 
condition of freedom, at the point where wool is converted into 
cloth, than it does at the point where grass is converted into 
wool. If human freedom can be said to stand connected with 
any condition of prices, it must be solely with the price of the 
time of the person whose freedom is to be estimated. To those 
localities where the diversity of industries is greatest, will often 
flock the greater number of those who are so badly equipped for 
the race of life that they would soon perish absolutely in Pata- 
gonia or on Selkirk's Island, but who get on after their fashion in 
a great city, because industries are there so diversified that occu- 
pation adajDted to the least competent is everywhere within reach. 
It is difficult to conceive an intellect so deficient that it could not 
sweep a sidewalk, or strength so feeble that it could not keep an 
apple stand, a child so dull that it could not sell a newspaper, 
or a pauper so old, or blind, or feeble, that he could not beg. Peo- 
ple, therefoi'e, who could not sux:)port themselves a week in the 
rural districts, flock to the cities as pi'esentiug the freest field of 
struggle for the feeble. In this way cities are often charged with 



122 ECONOMIC PHILOSOPHY. 

producing the misery they only shelter ; the vast inequalities of 
fortune, which prevail in cities, are set down as due to the fact 
that those, who have never had any productive power adequate to 
their maintenance, have been in some way despoiled of the good 
living they are assumed to be entitled to, by those whose fortunes 
are in excess of their means of consumj)tion, or even of adequate 
consideration. It is, however, because of this very overflow of 
surplus wealth, that the incompetent and unproductive find ii 
easier to survive in the vicinity of the very rich, than to endure 
anywhere else.* 

Hence the scene of greatest diversity of industries, and most 
rapid circulation of money, is at once that in which industrial 
freedom rises highest, and yet in which the pecuniarily helpless 
swarm in greatest numbers, not because they are here reduced by 
competition to poverty, but because they are here enabled to sur- 
vive loBgest on the smallest endowment of productive energy. 

49. Countries of Low and High Prices. — Prices of com- 
modities generally, and especially of labor, seem to descend at 
each stage as we pass from the silver and gold producing centers, 
viz., North and South America, and Australia, through the coun- 
tries which have usually made most use of specie, viz., England, 
France, and G-ermany, towards those oriental countries, China 
and India, where labor is very largely in surplus, and silver, es- 
pecially, is hardly produced at all, but is finally absorbed. It 
would seem as though the precious metals gain in purchasing 
power as they recede from the point of their production, until, 
amidst the reputed six hundred millions of people dwelling in 
India, China, Siam, and Japan, their average purchasing power 
as applied to land, labor, and commodities which do not admit of 
export, reaches its maximum. This apparent difference of prices 
is aided by two other causes. The lower relative use of machine 
IDOwer in Asiatic countries renders the actual product of labor less 
there than in Western peoples when the same degree of effort is 
put forth; and the simpler, less animal, and less nerve-stimulating 
diet of Eastern races, together with their inert and supine charac- 
ters, renders them indisposed to put forth an equivalent effort in 
industry for purposes of accumulation after the present wants of 
the body are satisfied 

* In Yorkshire it is said that woolen rags to the amount of $360,000,000 a year are 
manufactured into useful articles. {Tooke, "Wool Production," 196.) In Paris 4,000 per- 
sons maKe a living from what they picli up in the streets. Roscher, "Pol. Ecou.," vol. 
ii, p. 220. 



DE8TR UGTIVE "PRICES. 1 2 3 

Of these concurring' reasons, the Western superiority in ma- 
chinery has only existed for a century, in any marked degree, 
while the drain of silver to the East is an affair of many cen- 
turies. It must he admitted also that both Chinese and Hindoos 
display every required degree of industry, thrift, and endurance, 
when subjected to the inducements of high wages and better 
modes of living,- in the United States and Eui'ope. 

It may be doubted, therefore, whether there is any other per- 
manent cause for difference in prices in the Western and Eastern 
world, than the fact that the point of chief production of the 
money metals is in the two Americas, the point of their chief 
utilization is in the banks and exchanges of Europe, and from 
these they percolate but slowly and feebly into the avenues of 
Asiatic commerce, owing to the slowness of Oriental peoples in 
adopting the machinery and ]3roductive methods of Western 
civilization. 

Whatever may be the reasons, the descending value of a day 
of average labor time, as we recede from the points of gold and 
silver production to those of their final absorption, may be stated 
with sufficient accuracy, as follows : «■ 

United States : California, $3 ; Colorado, $2 ; lUinois, $1.75 ; 
New York, $1.50 ; Massachusetts, $1.25. England, $1; Belgium, 
90 cents ; France, 80 cents ; Germany, 70 cents ; Austria, 60 
cents ; Spain, 60 cents ; Italy, 50 cents ; Scandinavia, 40 to 30 
cents ; Russia, 20 cents ; Turkey, 20 cents ; Egypt, 15 cents ; 
Arabia, 12 cents ; India, 10 to 5 cents ; Japan, 8 cents ; China, 
5 cents. 

A scale of descent, in the value of labor-time, of this n-ature, 
indicates that, as to labor, every geographical area from which, 
for any i-eason of immobility, whether it be poverty, patriotism, 
or sluggishness, laborers refuse to migrate, in order to seek a 
higher price elsewhere, becomes to that extent an independent 
market for labor, with a tendency to impart its own scale of 
prices to the products of labor, or rather to cease producing all 
those products whose prices cease to be remunerative. 

In so far, therefore, as any other country, through its greater 
command of capital or machinery, or low-priced human labor, or 
enslaved human labor, can produce a particular commodity at a 
money cost lower than it can be produced for in a country whose 
people can neither migrate nor adopt the cheaper methods of 
l^roduction, it is plain that the latter must exclude the cheaper 
product or see their own capacity to produce it destroyed by the 



124 



ECONOMIC PHILOSOPHY. 



foreign competition. Whenever low prices, obtained by importa- 
tion, involve the destruction of a domestic pi-oduction, which 
both countries have equal natural facilities for producing, the 
first interest of the importing country is to encourage the appli- 
cation, by its own people, of the artificial facilities to which the 
rival country owes its temporary superiority, and consequent lower 
pinces. 

These may consist of inventions, machinery, discoveries, cap- 
ital, skill, low rates of interest, low rates of wages or the like. 
All of these any country can more wisely adopt than the low 
rates of wages, since a descent in rates of wages involves a degra- 
dation in the standard of living, which may react on the productiv- 
ity of the labor itself, by making it less efficient, and may involve 
an inhumanity from which the conscience of society would revolt. 




Chart of Prices op Wheat. (See p. 112 and note.) 

Upper black line— Price of Wheat in England from 1780 to 1880, in shillings, per 
quarter. 

Lowerblackline— Price of Wheat in France from 1780 to 1880, in francs,. per hec- 
tolitre. 

Black dotted line— Price of Flour in United States from 1798 to 1860, in dimes, per 
barrel . 



CHAPTER IV. 

TITLE AND USE. 

50. Title and Labor. — Title to property is vaguely associ- 
ated, ill inauy economic and in all socialistic arguments, with 
labor expended in producing it. It is contended that land can 
not justly be the subject of private ownership because it is not 
created by labor, or because its value is not due to the person 
possessing or occupying* it. The value of land is due to the 
aggregate societary movement which brings it into demand. It 
is shown by that competition among purchasers for its title, and 
among tenants for its occupancy, which causes it to command a 
purchase price at the hands of the former or a rental at those of 



*Henry Oeorge (" Progress and Poverty," Lovell's Edition, p. 240) says : "Asa man 
belongs to himself, so liis labor when put in concrete form belongs to him. 

" And for this reason, that which a man makes or produces is his own, as against all 
the world — to enjoy or to use, to destroy, to exchange, or to give. No one else can right- 
fully claim it, and his exclusive right to it involves no wrong to any one else. Thus 
there is to every thiug produced by human exertion a clear and indisputable title to ex- 
clusive possession and enjoyment, which is perfectly consistent with justice, as itde- 
scends from the original producer, in whom it vested by natural law. The pen with 
which I am writing is justly mine. No other human being can rightfully lay 
claim to it, for in me is the title of the man who produced it. It has become 
mine, because transferred to me by the stationer, to whom it was transferreu 
by the importer, who obtained the exclusive right to it by transfer from the manu- 
facturer, iu whom, by the same process of purchase, vested the right of those who 
dug the material from the ground and shaped it into a pen. Thus, my exclusive right 
of ownership in the pen springs from the natural right of the individual to the use of 
his own faculties. 

"Now, this is not only the original source from which all ideas of exclusive ownership 
arise — as is evident from the natural tendency of the mind to revert lo it when the idea 
of exclusive ownership is questioned, and the manner iu which social relations develop 
— but it is necessarily the only source." 

Mr. C4eorge here traces back his title to the steel pen with which he writes to " those 
who dug the material (iron ore) from the ground and shaped it into a pen," as if this 
were evidence that labor originated title. But it proves nothing of the kind. Those 
wh» dug the ore from the ground and shaped it into a pen may never have owned the 
groimd, the ore, or the pen. Tliey may have been hired servants who sold the mus- 
cular efEort with which they dug the material from the ground and shaped it into the 
pen, in which case all they ever owned was their muscular effort, labor-time, and the 
wages they received in exchange for them. Their labor, as first performed, became a part 



126 ECONOMIC PHILOSOPHY. 

the latter. Causes of the values of land are thus reduced to the one 
cause, viz. : Demand, which is also the cause of the value of labor 
itself, of skill, of time, and of all forms of personal property. 

of the materials and of the pen, and belonged in that form to their employer. But if the 
iirst diggers of the ore owned the ore when dug, they did not own it by virtue of the act 
of digging it, for they would not have been allowed to dig it unless they had first owned 
it. As well might a horse-thief claim that the act of carrying off the horse of another 
gave title to the horse, as an ore-digger could assert that digging ore made it his. The 
title to the ore like the title to any crop, depended on title to the land. Thus Mr. 
George's title to his pen becomes, when traced back, the identical title to the land 
which he uses his pen to attack. Again he says, ibid. (p. 357) : 

"The truth is, and from this truth there can be no escape, that there is andean be no 
just title to an exclusive possession of the soil, and that private property in land is a 
bold, bare, enormous wrong, like that of cliattel slavery. 

"The majority of men in civilized communities do not recognize this, simply because 
the majority of men do not think. With them whatever is is right, until its wrongful- 
ness has been frequently pointed out; and in general they are ready to crucify whoever 
first attempts this. 

"But it is impossible for any one to study political economy, even as at present taught, 
or to think at all upon the production and distribution of wealth, without seeing tnat 
property in land differs essentially from property in things of human production, and 
that it has no warrant in abstract justice." 

Mr. George's uncourteous, and in the most exact sense, uncivilized remark, that the 
reason that the majority of men think private title to land to be just is that they do 
not think at all, seems to be an evidence, so far as it goes, that one can not become an 
admirer of the methods of savages without unconsciously adopting their manners. 
The study of political economy has, we think, never produced the impression upon any 
mind that Mr. George says it must produce upon all. We doubt if Mr. George himself 
did not first embrace this theory and then study political economy, after his fashion of 
stadying it, in order to find matter in proof. On p. 227 (Lovell's Edition) he says : 

" So true it is that, to whomsoever the soil at any time belongs, to him belongs the 
fruits of ' it.' " 

As all other things are immediately or ultimately " fruits of the soil," and as, accord- 
ing to Mr. George, the title to the fruits, I. e., to all other things, follows and is deter- 
mined by title to the soil, necessarily, if no one can justly have title to the soil, he can 
not justly have private title to any thing. All things must be owned in common. But 
where all things are held in common there can be (1) no commerce or exchange, as 
these consistin giving that which is one's own for that which is another's; (2) no gener- 
osity, for all generosity consists in giving that which is one's own to another ; (3) no 
rewards, for all rewards consist in obtaining from another for merit that which was 
his ; (4) no ambition, for all ambition consists in the desire to increase the stock of 
one's own ; (5) no production of wealth, for all production of wealth consists in bring- 
ing into being a surplus beyond our own needs for exchan'je, and perfect communism 
puts an end to exchanjre ; (0) no industry, for no man is industrious where industry can 
bring no increase of comfort ; (7) no comfortable living, for comfortable living can not 
be secured for the great mass of the world's population, without incessant industry on 
tne part of nearly all of them, and hence to abolish i)rivate titles to land involves an 
intense degree of want and suffering such as would render life an unmitigated calamity 
to every creature. 

Most of the uses of property can not be had or known at all except as they are private 
and exclusive, utterly unshared by any other. To till land is a use of this kind. Tho 
only absolutely communal use that can be made of laud is t.) hunt over it as the Indians 
did. Even tribal ownership of laud is inconsistent with Sir. George's theory that 



WHERE TITLES BEGIN. 127 

Bemaud being tlie cause of value, all things are produced, 
i.e., brought forward, because they are foreseen to possess value. 
Nothing is demanded merely because it has been produced. But 

because man did not create or produce land therefore he can not own k. For the 
' tribe came no nearer to creating land than the individual. Where, then, did one tribe 
get a greater right to exclude another than one individual has to exclude another? Nor, 
since the state did not produce the land, can the «tate own it. It simply can not be 
owned at all. And since, except as we own the laud on which things are produced we 
can not own the things produced, it follows that neither the individual, the tribe, nor 
the state, can own any thing. Mr. George's doctrine therefore lands us in that of 
Prudhon, that " all property is rol)bery." Mr. George doubtless thinks that he thinks, 
but the present writer can only acquit Mr. George of being destitute of the thinking 
faculty in the degree essential to a rational creature, by assuming that in the above 
extracts, and indeed throughout his work, he has been impelled by an impulse of in- 
tensely active and burning thouglitlessness. Mr. George's remedy is as follows: 

" What I, therefore, propose, as the simple yet sovereign remedy, which will raise 
wages, (1) increase the earnings of capital, (2) extirpate pauperism, C3) abolish poverty, 
(4) give rnmunerative (5) employment (,6) to whoever wishes it, (7) afford free (.8) scope 
(9) to human powers, lessen crime, (10) elevate morals, (11) and ta?te, (12) and intelli- 
gence, (13) purify government, (14) and carry civilization (15) to yet nobler (16) heights, 
is— to appropriaie rent by taxation. 

" In this way, the slate may become (17) the universal landlord without (18) calling her- 
self so, and without (19) assuming a single new function. In form, the own- 
ership of land would remain just as now ("20). No owner of land need be dispossessed, 
(21) and no restriction need be placed (.22) upon the amount of land any one could hold. 
For, rent being taken by the state in taxes, (23) land, no matter in whose name it stood, 
(24) or in what parcels it was held, (25) would be really (20) common property, and every 
member of the community(27)would participate in the advantages of its ovvnership"(28). 

Here are twenty-eight distinct prophecies in thirteen lines, to entertain any one 
of which requires, not a more profound faculty of thinking than that possessed by a 
majority of mankind, but only a more superb egotism, combined witli the eccentric 
retrogression which enables a man brought up in civilization to prefer barbarism. 

Two thousand years ago Aristotle (Politics, Book ii., ch. v.) said concerni'^.g this sys- 
tem: " This system of polity does indeed recommend itself by its good appearance and 
specious pretenses to humanity ; and the man who hears it proposed will receive it 
gladly, concluding that there v/ill be a wonderful bond of friendship between all its 
members, particularly when any one censures the evils which are now to be found 
in tociety, as arising from property not being in common; as for example the dis- 
putes which now happen between man and man, upon their contracts with each other, 
the judgments passed to punish perjury, and the flattering of the rich ; none of which 
arise from properties being private, but from the corruption of mankind. For we see 
those who live in one community and have all things in common, disputing»with each 
other oftener than those who have property separate ; but we observe fewer instances 
of strife, because of the very small number of those who have property in common, 
compared with those where it is appropriated. It is also but right to mention not only 
the evils from which they who share property in common will be preserved, but also 
the advantages which they will lose; for, viewed as a whole, this manner of life will be 
found impracticable." 

The singular fact in Henry George's mental obliquity is that he admits all the histori- 
cal facts essential to justify private property in land, if he formed liis opinion on a basis 
of historical evidence, and then denies its justice on the high metaphysical basis that 
its injustice has been directly revealed to him from God. For, that a policy promotes 
the freedom of man is to an economist its most complete vindication. Yet on p. 275 the 



128 ECONOMIC PHIL080PHT. 

before a tiling can be produced, in the literal and economic mean- 
ing of that word, i. e. , brought or led. forward, it must first be 
owned, and only one who owns it can lawfully produce it or 
lead it forward. Instead of labor being the source of title, i. e. , 
instead of its being true that a man only comes to own things by 
having fii'st j)roduced them, it is true that a man only labors 
productively with and upon things that he has previously appro- 
priated and made his own, either by seizure, gift, finding, pur- 
chase, descent, contract, bequest, or some other mode of acquiring 
title. 

51. Title Dates from Seizure or Appropriation.— That 
the act of appropriation, by which a thing becomes property, 
must precede an 3^ jDroductive labor upon it, becomes evident both 
by a priori reflection upon the motives which ordinarily govern 
human action, and by an observation of the mode in which legal 
rights to property come to exist. In no race or condition of soci- 
ety has the niind of man entertained the idea that the pi-operty of 
B could become the property of A merely by the voluntary act of 
A in w^orking upon it knowing it to belong to B. Societies have, 

only revelator wlio has yet re-enforced economic science by super-mundane wisdom, 
says : 

" The reason, I take it, that with tlie extension of the idea of personal freedom has 
gone on an extension of the idea of private property in land, is that," &c., &c. His 
supposed reason is immaterial. The fact, as he admits, is that private property in land 
and human freedom have increased together. 

Again, on the same page he says: " Thus with the extension of personal liberty, went 
on an extension of individual proprietorship in land." He might have added that one 
of the chief forms of personal liberty consists in the liberty of a person to own land, to 
have a home, which he can call his own, not merely as a fiction by paying rent to the 
State, but which he can transmit to his children free of rent. Deprived of the liberty 
to own land no man could be said to have any personal liberty. He would be the slave 
of his tribe, without a home, a wanderer and a nomad. Having admitted that personal 
liberty grows with ownership of land, which is all the warrant one uninspired would 
want to justify private title, Mr. George then assumes the altitudinous attitude of a 
revelator : 

" The laws of nature are the decrees of the Creator. There is written in them no 
recognition of any right save that of labor ; and in them is written broadly and clearly 
the equal right of all men to the use and enjoyment of nature ; to apply to her by their 
exertions, and to receive and possess her reward. Hence, as nature gives only to la- 
bor, the exertion of labor in production is the only title to exclusive possession." 

To so much of this utterance as purports to make known that the Creator has issued 
a decree to the effect " Thou shalt not own land," the majority of mankind will listen 
with profound reverence as soon as they shall be satisfied that Henry George has heard 
from the Creator since they have. To so much as states as an economic doctrine that 
labor is the only, or is any source of tftle, they will ask what he means by labor. If 
by labor he means labor performed, then, since all labor performed is capital, and cap- 
ital will always buy land, it is true that labor in this sense deserves land and always 
gets it. But labor unperformed— to buy land with that is the rub indeed! 



TITLE PRECEDES LABOR. 129 

when and where land was owned communally, provided that the 
neglect of the occupant to till, improve, fence, occupy, irrigate, or 
mine it, should be deemed by the law to be an abandonment, by the 
occupant, of his possessory title. In that case, the new appropri- 
ator would be justified in regarding it as unappropriated land, 
and could enter in and work the land. In tliis case, as in that of 
the previous possessor, his new title would begin in the act of 
appropriation or seizure. Even his title to the crops and pi'oducts, 
produced by him on the land, would either depend on the validity 
of his act of appropriation, or upon some rule of law whereby 
his good faith concerning the land, i. e., his belief that he had the 
right to appropriate it, was made a ground for giving him title to 
the crops produced by him while in possession. In no case, we 
repeat,* was an intentional and confessed trespasser permitted to 
acquire title by his trespass, whatever might be the ■ value of the 
labor he had blended with the article during its intentionally 
wrongful possession by him. 

Nor is it in the nature of any man, in any race, to hope to gain 
title to a thing he does not own, by working upon it, unless it 
lies open to appropriation. In this case he first appropriates it, 
afterwards works upon it, and then bases his title on his act of 
appropriation and not on his labor. The phrases of the early 
Roman law show definitely that title in all cases arose in aj)pro- 
priation. All dominion or title, whether to wife, cliildren, slaves, 
cattle, or land, was called manus — hand power, or the gi'ip, grasp, 
or grapple by which the owner held them. The act of acquisition 
by which his title vested was mancipium or the "giving them into 
his hand, " a word which included the idea of capture. The common 
form of closing hands in ratifying a trade is believed to be a survival 
of the old grapple or wrestle in which the victor carried off his 
booty as prize. Our modern purchaser thus succeeds the ancient 
victor, and our modern vendor takes the place of the vanqiiished. 
The early English word seizin, meaning the occupancy of land 
under a claim of title, as distinguished from mere possession, dis- 
closes and incloses the fact that all titles began in an ancient 
seizure, or act of appropi'iation of title, which a modern seizure 
could not aspire to be or undo. The title having once been appro- 
priated by seizure could not be the subject of a second appropri- 
ation, but all subsequent acts of acquisition must be by transfer 
from the original appropriator. f 

* Vide Ante. 
tThe chief function of laws and courts is to protect titles. It is natural that jurists 



l30 ECONOMIC PmLOSOPHT. 

52. Private Title Is Monopoly. — In the infancj^ of society 
titles were at first almost wholly in the tribe, the individual owning 
only his food, clothing, and shelter ; then in the state, and finally, 
in a mixed degree, in the state and the individual. The title 
attached either to persons, chattels, or land.* The economic prin- 
ciple underlying society is that no person will devote much labor 
upon that which he does not own, and will not work except for 
his personal and private benefit, but will work assiduously and 
industriously where the full return for his labor is to come to 
himself. In the degree, therefore, that private titles are multi- 
plied and perfected, protected by law and vindicated by courts, 
differentiated in kind, extent, and duration, and adapted to the 
wants of a people in complexity of quality "Srid and simplicity 
of transfer, in like degree is the production of wealth and 
increase of values promoted. Moreover, as all private title is 
carved out of what was previously a possession in common by the 
tribe or state, and as this process of carving out private titles is 
entered upon in order to stimulate activity in production by 
substituting the strong motive of private interest for the weak 
one of public interest, it may be said that the i^rogress of industrial 
civilization is attended by a continual increase in the number and 
extent of the private monopolies through which society distrib- 
utes at the most economic rate the services of its members to 
each other. The growth of productive energy is proportionate 
to the growth of private property. Private property is in all 
cases the conversion into a personal monopoly of something pre- 
viously enjoyed in common. As private property advances, in 
the volume and quantity held by one owner, and in the number 
of owners, society, including the non-owners, gets constantly a 
larger measure of its use at a lower cost. Thus, at least in 



should have the clearest views of the origin of Title. Blackstone (" Commentaries on 
the Laws of England," Book ii.) first divides Title, as to its vulnerability, into title by 
possession, by right of possesBion, and by right of property. The two last are intensi' 
fications of the fii'st, due to the continuance of possession in a manner indicating a 
greater or less acquiescence by others. He then divides it, as to its mode of acquisi- 
tion, into title by descent and by purchase, both of which point back to possession as 
their origin, tinder title by purchase he includes the several modes of acquiring by 
Escheat, Occupancy, Prescription, Forfeiture, and Alienation, which latter included 
alienation by will, by marriage, by gift, or by deed. Neither in English, Roman, Jew- 
ish, nor any other law was it recognized that title to property could be acquired by 
labor. As law is but the generalization of facts, it follows from this unity in the law 
that in fact labor never gave rise to a title, even in a single instance. 

* "Outlines of Roman Law," by Morey, p. 33. 



THE STATE AS A FORM OF MONOPOLY. 13 1 

certain mai^ked instances, an increase of monopoly in title works 
out a great diffusion of socialism in use, or the greater the 
number of exclusive ownerships of pi'operty the fewer are 
they who are excluded from its enjoyment, since it is only by 
having an exclusive title to many things we do not want, that 
we ai'O furnished with the means wherewith to exchange for 
the many other things we do want. 

In the coramunal life no man's time and labor can be his own 
or subject to his own direction. They must belong to the com- 
mune. In the completely communistic life, i. e., where the 
relation extends to the sexes, even his wife and children could 
not be his own, and no one would own any relatives, since he 
could not distinguish his father from his uncle or his sister from 
his most distant cousin. Aristotle* pointed to these vagaries in 
Plato's Republic, twenty centuries ago, in much the same terms as 
they are exposed to-day, remarking, " For there are two things 
which principally inspire mankind with care and affection, viz., 
the sense of Avhat is one's own, and exclusive possession ; neither 
of which can find place in this sort of community." * * " Pros- 
perity will increase as each person labors to improve his own 
private property." 

53. The State as a Form of Monopoly. — A monopoly of 
the privilege or power to allot land, decide controversies, punish 
crime, levy taxes, and make laws is called the state or govern- 
ment. 

It consists of a mechanism for vesting in a few persons certain 
general rights which may be supposed to have been previously 
diffused throughout the mass. The State begins therefore as a 
monopoly (compared with anarchy) of the privileges of com- 
pelling service, holding and exchanging property and making 
war, which is the primal form of making law. Later on it 
extends its supervision to worship, commerce, education, art and 
industiy. In theory, in a republic the whole voting class take 
part in the creation of this mechanism for making laws. Still the 
mechanism when created becomes, for the time being, a monop- 
oly of the law-making and law-executing power, to the direct 
exclusion of its creators. The title by which each officer pei'forms 
his functions is a monopoly power, created by law, though he 
may be said morally to hold the power in trust, that he will 
exercise it for the public weal. 

* "Politics and Economics," Bohn's Edition, p. 41. 



132 ECONOMIC PHILOSOPHT. 

The means of enforcing this moral obligation are, however, the 
very imperfect ones of withdrawing the' monopoly and transfer- 
ring it to another, and still another. But obviously mere rotation, 
in those who are to exercise a monopoly of power, does not lessen 
the exclusiveness of monopoly, at any one moment, but only its 
duration as to one person. 

The philosopher Hobbes was among the first to advocate the 
theory that states originate in compact. This theory became very 
popular among advanced thinkers during the eighteenth ceutury 
and finds vigorous expression in those sentences of the American 
Declaration of Independence which assert that ' ' all men are 
created equal and are endowed by their Creator with certain 
inalienable rights, among which are the right to life, liberty, 
and the pursuit of happiness ; that to secure these rights, govern- 
ments are instituted among men ; which derive their just powers 
from the consent of the governed." 

In pi'actice, governments derive their actual jjower from the 
ability of an aggregated constituency to suppress all opposition. 
This is the only test known to history or international law. The 
consent of the governed, to the current conduct of a government, 
through the election of its officers, has been asked only in Grreece, 
Rome, England, America, and a few other states in a modified 
and partial degree. Hence, under the definition pi'escribed by 
the Declaration above referred to most actual governm.ents would 
be held to have had no just powers. 

The political scientist, searching for the origin of govei^nment, 
can not be bound by the language of a document designed rather 
to promote a revolution than to preserve a calm and exact equiv- 
alence between the figures of rhetoric and the facts of history. 
Most governments have originated, historically, in usurpation and 
seizure of powers, by men who had the strength and will to 
govern, who had in view the profits, plunder, and wealth they 
could amass to themselves in the exercise of their power, and who, 
in all the earlier history of mankind, would have laughed at the' 
notion that equity, justice, or the common welfare formed any 
leading feature in their thoughts. 

As property begins in appropriation of men, lands, and goods, 
so do governments begin in the appropriation and assumption of 
power over men, lands, and goods. Hence, title to property and 
to government are in their origin one ; both are involuntary, 
since man can not help owning and governing, or being owned 
and governed. Before it existed among men it had begun to 



UO W LA WS GEO ]V. 1 ^Z 

exist among animals, and in the co-operative class of animals and 
insects, the ant, bee, beaver, etc. , it was carried to great perfec- 
tion by instinct. 

Not only is government due to an exercise of power which 
compels consent on the part of the governed, but each advance in 
government is due to the innovations introduced by those who 
for the fii-st time usurp unwonted powers. In this way particu- 
lar portions of government grow by usurpation, under strong 
men, and are eliminated by timidity, while filled by weak men. 

Because Chief Justice Marshall was a strong man, individually, 
the Supreme Court of the United States obtained the unforeseen 
power to adjudge an Act of Congress unconstitutional. Because 
President Jackson was a strong Executive, Congress lost, through 
his veto, the power to incorporate a bank of the United States. 
Because George III. was obstinate, without being strong, and so 
lost the American colonies to Gi^eat Britain, the ministry in En- 
gland ceased to be the servants of the Crown, and became the ser- 
vants of the House of Commons and masters of the Crown. 
As governments are daily molded into new forms by the 
])ower and genius of the men who administer them, so in all 
times title to property has been in a degree the plastic expression 
of the dominant will of the class who succeeded in appropriating, 
develojDing, and creating the property. Before all statutes come 
the judicial decisions in similar cases, of which the statutes are 
but the condensed result. Before the judicial decision, there 
must have been a case to decide. Before there could be a case to 
decide, some one man must have usurped a right with which an- 
other was unfamiliar, pursuant to an interest, or appropriation of 
values, which the other' opposed. Hence, law carries us back to 
visurpation and contest, rather than to compact, as its origin. And 
when the individual title has been vindicated, by contest in court, 
each ramification of its development into many estates, modes of 
transmission, capacities for concealment and means of subdivided 
enjoj'ment becomes also thesubject of enactment into statutes 
only after their nature has frequently been passed upon by courts, 
in consequence of a judicial question arising between an aggres- 
sive innovator, or usurper, or appropriator, on the one hand, and 
a conservative defender on the other. 

The law of titles to property, therefore, has risen into compact 
systems of jurisprudence as slowly and involuntarily as coral 
reefs have risen in the ocean. As each atom of lime in tlie reef 
is the skeleton of a dead insect, the residuum of his effort to sur- 



134 ECONOMIC PIlILOSOPHr. 

vive as permanently as possible by making liis nutrition exceed 
his waste, so in the law of titles, every principle evolved has 
been the contribution of a successful litigant, grappling with a 
defeated one, each animated by the desire to maintain an old 
right or create a new one, because behind the supposed right in 
either case lay a profit, or at least an excess of income over ex- 
penditure, which could only be obtained either by an act of ap- 
propriation or of resistance. 

In this way the sons and servants of the household first ex- 
pelled strangers from the inheritance and enjoyed it in common. 
Then the sons and daughters drove out the servants, and then in 
some instances the sons drove out the daughters, and the eldest 
son drove out the younger. 

Thus the power to devise by will, and to convey by deed, grew 
into law. The power to mortgage, and to sell under mortgage, 
and to restrain from sale, are later powers, which were supposed 
to have been evolved within the period of the Roman law, until 
cuneiform inscriptions bring then to light in the ruins of primeval 
Asia. In every stage of this evolution the real goal and motive 
in the mind of each litigant was one of private profit. In the 
earliest stages of society the same motive animated the judge. To 
this day in Asiatic and African countries the client expects to in- 
fluence the court by presents. At length as the judge came to 
achieve a greater unity of interest with society, he came to see 
his private interest in deciding questions in the manner most 
profitable to the general public, which is the ultimate definition of 
impartiality and equity. Thus, out of the motive profit, have 
been evolved law, justice, and equity. 

Each advance, toward a refined system of jurisprudence, consists 
in a clearer vindication of private title in that which had an- 
ciently been common right, accompanied by a larger power of use 
in exchange on the part of the owner, attended by a more equal 
diffusion of the utilities resulting from the use among mankind. 

Thus land, held communally by the tribe, can only be used for 
hunting or fishing, and can not be tilled until private title is 
acknowledged. The first to fence and till it is a usurper and an 
encroacher ; so is the fii-st to defend it as an inheritance, or as a 
grant, or to hold it in partnership or for a debt. But, in the sum 
of these usurpations and encroachments, lies the evolution of title 
to land into that stage wherein the secure possession of it and its 
fruits can be transferred in fee, for life, for years, at will or for 
an hour, by deed or by devise, to one or to many, or to a corpo- 



HOW RIGHTS ARISE. 135 

rate one composed of many, in absolute right of enjoyment or in 
trust or to secure a debt, in perpetuity to a charity, or in expec- 
tancy to some person now unborn. 

With each increase in this securitj' of title, there is an increased 
power of deriving profit from its use, which is itself the measure of 
the increased degree in which it serves the wants of society at large. 

Titles alone render industry possible by rendering the future 
foreseeable. When they who fought in the wars of the Roses on 
either side could convey their lands securely to others, in trust, 
and thereby exemijt them from confiscation for their treason, a 
crime equally chargeable on whichever side they fought, or if 
they refused to fight on either, the tenant holding a lease from 
their grantee could till the lands of a traitor in perfect security as 
to his crops, while the soldier of fortune went on fighting in 
equal security as to his title. Thus a secure division of labor was 
effected, whereby the one aided in perfecting the stability of the 
state, while the other aided in maintaining the supply of food. 

The first salvor, who tied the vessel he had saved from wreck to 
his own and towed her into port, and then demanded half her 
value for his services, converted into private right a service 
which, if rendered at all, must have been previously rendered for 
the public weal. But when the courts gave the suitor his claim 
the public weal was far better served than by denying it, since 
twenty vessels would now be saved for private profit where one 
might have been saved from generous motives. 

The first carrier who exacted a fare for carrying a passenger 
over a public highway, where, so far as travelers had previously 
been carried at all, they had been carried gratuitously, was as 
truly a usurper and monopolist as the first man who fenced land 
])reviously held in common. But when his demand was sus- 
tained, the transportation of passengers and freight made its first 
step towai'd the modern railway system. The first man who took 
his neighbor by the collar and led him before a magistrate, be- 
cause he did not fulfill a promise, was doubtless denounced by 
tlie pi'omiser as a usurper. But when the court assumed jurisdic- 
tion and sanctioned the act there was a beginning of commercial 
law and of commercial honor. 

54. Title, the Source of Exchange, and of Division of 
Labor. — The principle in human nature, which compels the 
creation of the monopoly known as The State, is the same as that 
which compels private title to land and to all other forms of prop- 
erty, viz., that whatever, to use a homely phrase, is every body's 



136 ECONOMIC PHILOSOPHY. 

business is nobody's business. To have the work in any depart- 
ment of effort well done, those who do it must have a reward 
proportionate to the value of their work to society, and a training 
and capacity adapted to the particular kind of work. Govern- 
ment is one of the first steps toward, what Herbert Spencer and 
the sociologists have called the specialization of functions, and 
what Adam Smith and the economists have styled the Division 
of Labor. As men can only make good watches, who are profi- 
cient in the "art and mystery" of watchmaking, so skill in 
framing and administering the laws and economies of a nation 
can only be attained by men skilled in the knowledge of those 
laws and economies. It would be as great a waste of time and 
diversion of effort, on the j)art of most farmers, miners or fisher- 
men, for them to devote the degree of study and investigation to 
laws and economics whicli would be essential to make them very 
poor judges, lawyers, or legislators, as it would be on the part of 
a legislator to attempt to become an exjjert fisherman. But the 
power to administer government, wisely and well, is not wholly 
an affair of accomplishments, or which can be leai-ned in schools. 
Even if it were, the power and address essential to get office under 
any system of government, are qualities without which the ability 
to govern, when in office, would be of no value. These powers to 
get office often arise in the most fortuitous and accidental way, 
out of qualities of character which are by no means identical 
with those which would insure a proper performance of the 
duties of office. Hence, while the state theoretically assumes that 
its officers are selected for their higher skill in administering offi- 
cial duties, they are in fact often selected through their higher 
skill in manipulatmg the machinery of selection, a species of skill 
which, in certain instances, may even unfit them for a wise per- 
foi^mance of the duties of ofiice, as where the machinery of selec- 
tion may be influenced by bribery and the duties of the office 
may be to punish bribery and the like ; still, in a crude way, the 
state is a mechanism for vesthig in a few specialized and skilled- 
persons, the business of making and administering the laws, and 
it works by making the emoluments and honors of office so profit- 
able that it becomes a matter of private interest to make a profes- 
sion and business of attending to matters of public interest. In 
so far, therefore, as the state is useful, it becomes so by the fact 
that it usurps, appropriates, and seizes, or society tacitly grants to 
it a monopoly, of judging concerning jural, economic and social 
questions, or of the functions of making, executing, and construing 



FREEDOM OR0W8 WITH PRIVATE RIGHT. 137 

the laws. Government is a monopoly of the power of decreeing 
and executing justice. Historically, the monopoly of power comes 
first, and the desire to do justice, later. Government, in its bar- 
barous beginnings combines the maximum of force with the 
minimum of equity. Theoretically, but for government, all men 
would have an equal say as to what is right. Practically, very 
few men would think of right, as power would be the only thing 
desired. So, before private property in land is established, all 
men have nominally an equal right to the use and product of all 
land. But the right of all, to use for hunting, precludes the right 
of any, to use for farming and gardening, and so pre- 
vents each man from producing as much as he immediately 
wants, thus chaining all down to the severest penury. Private 
property in land steps in, to make it the interest of each to jDro- 
duce what others want, by enabling him through his private 
title to that which he produces, and through the better mode 
of tillage which comes only with exclusive title to the soil, to buy 
what another has produced. Thus private property in land is 
essentia] to exchange, because that which all own no one can 
sell, and land owned by all does not admit of those permanent 
crops, orchai'ds, impi'ovements, etc., which extend over years. 
Under a state ownership, or tribal ownership of land, there must 
necessarily be a state, or tribal title, to all its products, and to 
the labor itself which produces the products, and hence a right 
in each to enjoy them, but in none to exchange them. "What- 
ever each gets he must get by allotment. Hence the monopoly 
of the land, by giving to individuals a private title, is essential 
to each individual having a title to his own labor, and to that 
wide diffusion of a great diversity of products which is brought 
about thi'ough exchange, commerce, trade, buying and selling. 
While the monopoly seems to build up the individual at the ex- 
pense of the public, it really is the first step in freeing the indi- 
vidual to serve himself and inciting him to serve the j)ublic, by 
making it a source of profit and power to him, to produce on 
his land a vast excess of commodities of which he has no need, 
because he knows that those commodities, being his own, can 
be freely exchanged for those he needs, thus in the end se- 
curing to him a far greater variety and diversity of commodi- 
ties for consumption, than he could in person produce. Whatever 
advantages to society grow out of connnerce in commodities and 
division of labor are indirectly due to that private title in com- 
modities, Avithout which no such facts as commerce, or division 
of labor exist. 



138 ECONOMIC PHILOSOPHY. 

Private title in commodities is inseparable from private title in 
the instruments by which commodities are produced, i.e., the 
land, labor, and other means of their production. If the latter are 
o^vned in common by all, the former must be allotted so that each 
shall get a share proportionate either to his needs, his desert, or 
his importunity and troublesomeness. This, as we have seen, is 
done in all socialistic and tribal stages of growth. But in this 
condition of things the collective state, or its chief, is the only ex- 
changer, and it can only exchange with somebody outside its 
frontiers. Members of a state, which jDrovides for all its members 
out of a public crib, have no motive to exchange and no private 
title to commodities. A social, tribal, or communal ownership in 
land, by involving logically a like ownership of labor, goods, and 
products, pei'petuates poverty, slavery, and indolence, by paralyz- 
ing commerce. 

55. Titles Becoming' Private. — The first essential con- 
dition to commerce and division of labor being private ownership 
of land and goods, it follows that the growth of a country in 
wealth, production, and civilization will depend largely on the 
degree in which it asserts this principle of private ownership, i. e., 
the promptness with which it converts its lands from tribal, com- 
munal, or national to individual ownership.* 



* It seems to have been a notion generally entertained in the ancient world that 
every citizen of a country should be a landholder ; and that the territory of a state, so 
far as it was not left uninclosed or reserved for public purposes, should be divided in 
equal portions among the citizens. Such a distribution of public land seems to have 
been acted upon as a recognized principle from the earliest period to which existing 
historical records extend. (Encyclop. Brit.— Art. Agrarian Laws.) Hence the division 
of Canaan into private allotments to every Hebrew (Numb, xxxiii. 54), naming every 
allottee (Numb, sssiv. 18). The year of jubilee did not return these lands thus privately 
allotted into liodcje podge or communal ownership, but only restored them from 
grantees and mortgagees to their original owners or their heirs (Numb. xxv. 10). In the 
republics of ancient Greece and in the Grecian colonies a similar system of division 
prevailed (Thucyd., v. 4 ; Herod., iv. 159). Lycurgus is represented by Plutarch 
(Lycur.) as redividing the whole territory of Laconia into 39,000 parcels, of which 9,000 
were assigned in equal lots to as many Spartan familiLS, and 30,000 also in equal lots to 
their free subjects (i6.). But this equal division of land between private owners did not 
imply among the Greeks that the equality of ownership should bo forcibly maintained. 

The enactments among the Romans for dividing the public domain {ager intblicus) 
among private holders were called Agrarian laws. For a long time they were misun- 
derstood to mean enactments for prohibiting Roman citizens from owning lauds above 
a fixed amount, and as authorizing the division among the poorer classes of the estates 
of private individuals when these exceeded the prescribed limit, thus legalizing a sys- 
tem of plunder which would have been subversive of ail social order. No such laws 
were enacted in Rome or any other state. The Agrarian laws merely provided that 
where citizens had appropriated more of the public domain than they were by law al. 
lowed to do they should be required to restore, but had no relation to lands acquired by 



IfEW MODES OF PlilVxiTE TITLE. 139 

The distribution of the land of the United States, from the form 
of communal ownership in which it was held by the Indian 
tribes, and in which it was first feebly attempted to be held by 
the settlers at New Haven, Jamestown, and Plymouth, into pri- 
vate ownership, was a substitution of self-interest in lieu of social 
interest as the motive to industry. The intrusting to private 
railway corporations, of the business of giving cheap transporta- 
tion to mai'kets, came to be a means of effecting a most important 
public function entirely at private risk as to loss, and at private 
cost as to capital. The evolution of the land system and the rail- 
way system of the United States were thus the concurrent work- 
ing of the principle that private title, or the profits of monopoly, 
form a far stx'onger inducement than public spirit, to the expendi- 
ture of inventive force, and of capital, in ways that are socialistic 
in their results. Nothing serves society at large more usefully 
than steamers, railways, printing presses, telegraph facilities, 
power looms, spinning jennies, the manufacture of India rubber, 
photography and the like. But to perfect each of these in the 
breadth of its social use, i. e., in the number of persons who 
might enjoy its use, some new form of aggression on private 
right was hi vented and sanctioned by law and some new mode 
of private title was created. For railways, their projectors were 
allowed to take lands for a way over which they alone could 
draw their carriages. Previous ways had been open to the car- 
riages of all. For the highest utility of printing presses men 
were denied the right to manufacture copies, indefinitely, of any 
book they might possess. For, when all books were written, every 



pnrcbase, or otherwise than by fencing in, unlawfully, portions of the public domain. 
(Encyclop , Brit.— Art. Agrarian Laws.) This was demonstrated by Prof. Heyne of Got- 
tingen in 1793, by Heeren and Hegewisch and by Niebuhr (ib.). 

In its article on commons the Encyclopedia Brittannica says : " It is a well-known 
result of the application of the historical method to laws and institutions that it has 
reversed many of our leading conceptions of the natural or original forms of property. 
That the primitive form of property in land was not severalty but commonalty, that 
land was held not by individuals but l)y communities, and that individual ownership 
was slowly evolved out of communal ownership, are propositions as nearly as possible 
the opposite of our a jJfiori ideas on the subject. The existence of rights of common 
is one of the traces of the ancient system still remaining in our law, but its real signifl- 
cancc was for a long time obscured by the feudal theories on which the law of real 
property is based. Among the English, as among other Teutonic nations, the system of 
landholding by village communities prevailed. . . The increase of the population and 
the growing need for food-producing land made it the interest of both the lord and of 
the public also that much of the common ground snould be brought under cultivation. 
Down to the year 1800 this was effected by private inclosure acts, of which there were 
as many as 1600 or 1700. 



140 ECONOMIC PHIL080PET. 

scribe was free to copy any book. With printing came the new 
form of monopoly known as copyright. And this monopoly, in 
the profit of multiplying copies of a book, effects a far greater 
multiplication of copies than would be effected without it. 

Land being the primary implement, agent, and condition of all 
production of commodities, the first economic requisite to the 
rapid and cheap production of them all, is that title to land shall 
be easily obtainable, and when obtained, shall be easily defended. 
When, to these, are added ready access to the consumers of land 
j)rodLicts, and a free influx of all the industries which can use the 
land most productively for mankmd, all the conditions of growth 
in wealth ai^e assured. The monopoly of land by great families 
in England causes the government there to be aristocratic. The 
early diffusion of land in America caused the republic. 

56. The American Land. System. — A few colonists came 
to America for opinion's sake, and a few for ci'ime. The great 
mass came hither for profit, to better their pecuniary condition.' 
Had the governments, which first obtained footing in America, 
limited the land system by making large grants to a few propri- 
etaries, and exacting that these should grant only leases to ten- 
ants; and had they, without jealousy, created the large propi'ietors 
into a peerage, with like powers to that of England, including 
seats in the British House of Lords, while the colonial delegates 
should have like seats in the Commons, it is difficult to prove that 
the Anglo-Saxon race might not have continued to this day to 
be one empire. A difference in the allotment of land left the 
colonies without the materials for representation in the House of 
Lords. The creation of colonial legislatures provided them with 
a satisfactory substitute for the Commons. Hence the colonies 
fell away from Grreat Britain, because not allowed a represen- 
tation they had never desired. During the colonial period the 
increase in population in the territory of what are now the 
United States was slow. The entire population in 1680, sixty 
years after the landing at Plymouth and seventy-three years 
after the settlement of Virginia, was only 80, 000 ; in 1701 it had 
grown to 260,000 ; in 1753 to 1,051,000 ; in 1775 an official esti- 
mate made it 2,383,000; and in the first census of 1790 it was as 
follows : 

Virginia 747,610 Connecticut 237,946 

Massachusetts 475,327 New Jersey 184,139 

Pennsylvania 434,373 New Hampshire 141,885 

North Carolina 393,951 Georgia 82,548 



ALLOTTING THE LAND. 141 

New York 340,120 Rhode Island 68,825 

Maryland 319,728 Delaware 59,094 

South Carolina .... 249,073 

During the first ten years of independence immigrants came to 
the number of only 4,000 yearly, and in 1794, the year of the 
French Revolution, to 6,000. 

The cession of lai'ge portions of land to private aristocratic pro- 
prietors, and the restrictions forbidding the colonists to manufac- 
ture machinery, cloths, iron, steel, etc., contributed, with the 
insecurity attending pioneer life among savages, to check immi- 
gration. Some of the private proprietors, including at least those 
in New York, intended to follow the English or feudal precedent 
of renting tlieir lands to tenants, retaining forever the fee. Such 
a system, logically carried out, would have resulted in a landed 
nobility and House of Lords like those of Great Britain. 

With the establishment of national independence in 1783,* the 
legal theory became, in the United States, that all titles to land 
are derived from the government of the United States, as in En- 
gland it had been that all lands are held immediately or ulti- 
mately of the king. Within the original States, only the lands 
remaining unappropriated, and those belonging to Tory owners, 
and passing by forfeiture to the government, ever actually vested 
in the United States. By the acquisition of the Northwest Terri- 
tory and Louisiana it devolved on the government to become the 
distributor, to private owners, of an area east of the Rocky Moun- 
tains, as large as China, and half as large as Europe. The present 
total area of the United States, including Alaska, is 3,603,884 En- 
glish square miles, exclusive of the lakes and other waters, while 
that of Europe is 3,828,328 square miles. 

The policy adopted by the United States was that of giving the 
lands to actual settlers, at a price per acre barely sufficient to pay 
the cost of survey and of the land department, surveying the 
lands on lines corresj)onding to the four cardinal points of the 
compass, so that the exact location of all lands for transfer, occu- 
pancy, or search of title could be expressed by a brief formula. 
This was done by running a meridian line north and south 
through some arbitrary point selected for convenience, then a 
base line east and west through the same point. One point of this 
kind exists in Ohio, and the meridian line which runs through it 
is called the first principal meridian, or in the language of con- 

* Supreme Ct., Jobnsoa vs. Mclntish, 8 Wheat, 543 :t 3 Op. Alt. Gen. 333. 



142 



ECONOMIC PEILOSOPHT. 



veyancing 1st P. M. The second principal meridian line is in In- 
diana ; the third makes its point of intersection with the base line 
at Vandalia, Illinois, the fourth in Western Iowa, etc. Lines 
drawn parallel to the meridian line at intervals of six miles, 
whether eastward or westward, are called ranges, those to the 
eastward being range 1, 2, 3, etc., east, and those to the west- 
ward, range 1, 3, 3, etc., west of the meridian. Lines drawn par- 
allel with the base line, whether to the northward or southward 
of it, become township lines, since the intersection of each with 
the meridian lines marks a plot six miles square, which is the 
townshij) of the land surveyors. In fact, also, the organization of 
the people into townships usually follows these lines. The 
location of the township, east or west of the meridian, is desig- 
nated by the range number, and its location north or south of the 
base line by the township number. Thus T. 38, N. E. 14 E. of 3 
P. M. in Cook County, 111., designates a township, being the 
38th to the northward of the base line, in the range (of town- 
ships) which are on the meridian line the 14th eastward from the 
8d principal mei'idian. Each township is divided by similar 
parallel lines into 36 sections. 

The sections are numbered as follows : 



6 

7 


5 


4 


3 


2 


1 


8 


9 


10 


11 


12 


18 


17 


16 


15 


14 
23 


13 

24 


19 

30 


20 

29 


21 


22 


28 


27 


26 


25 


31 


32 


33 


34 


35 


36 



The sections proceed by halving and quartering, or otherwise, 
until the definite lot, however small, is reached. Property worth 
millions may be thus described as lot 44 and Ni of lot 43, in 
block 2, Lockwood's subdivision of south half of W. i of N. E. i 
of N. W. i of section 3, T. 38 N. R. 14 E. of 3 P. M. The start- 
ing point of this description is at Vandalia, yet the land which 
it accurately describes is near Chicago. 

The simplicity and celerity with which conveyances can be 
executed and recorded, and titles searched, and cei'tifled, is also an 
element in bringing about the easy transferability of land. The 



ENSURING TITLES. 143 

several States, at an early date, adopted the system of recording in- 
struments affecting real property, and j)rovided that subsequently 
executed instruments, conveying interests in lands to purchasers 
for value, in good faith, and witliout notice, to thein, of the exis- 
tence of any prior, unrecorded, conveyance, will have precedence 
of the prior, unrecorded, conveyance. This enables a purchaser of 
land, generally, to learn by a search in one or two offices whether 
his title is valid. Judgments of the federal courts become liens, 
within the distinct of their jurisdiction, without record in any State 
office. The facts of heirshiiJ, deaths, and marriages must also be 
traced outside the record. These provisions were a vast im- 
provement on the English system, which lacked the provision 
making conveyances, in good faith, valid in the order of priority 
of record. Hence, in England, search was necessary in every 
place where an instrument affecting title might happen to be. In 
some cases, of property of considerable value, the legal charges, 
for making the transfer and becoming satisfied of the validity of 
the title, exceeded the whole pui'chase money paid for the land. 

Since the system of registration of deeds was perfected in America 
a still more perfect system, known as the Registration of Titles, 
has gi'own up and is practiced in all the colonies of Australasia, 
and, it is said, in sevei'al smaller states of Europe. This consists 
in vesting the recording officer with power to make the title per- 
fect in the grantee by simply recording the conveyance to him, 
as the title to a note is good, in the hands of a bona fide endoi'see 
for value, even though there may have been a fraud or theft in 
the previous course of transfer. Such a system makes land as 
negotiable as commercial paper. 

The Register is required to use care in recording the instru- 
ment, both in searching the i^revious conveyances to accertain in 
whom the present title is, and in properly identifying any new 
grantor as being the same person as the last grantee. An insur- 
ance fund is also provided, by requiring that a small fraction 
of one per cent, on the value of the land, should be paid as a 
transfer and recording fee, and out of the fees thus received 
a reserve is held for the purpose of indemnifying any owner who 
may lose his title by this system. Very few losses, in all not 
exceeding £8,000, have been paid out of this fund, which now 
amounts to about £158,000, and in three of the oldest colonies, 
viz.. New South Wales, Victoria, and Tasmania, the fund is still 
intact. 

The United States have not thus far limited the quantity of 



144 EGONOMIG PHILOSOPHY. 

land a single purchaser could monopolize, nor prohibited the free 
purchase of lands by citizens of foreign countries. Such, how- 
ever, is the objection felt in many quarters to the extensive 
purchase of lands by foreign capitalists, Avhich have, in a 
few instances, been made, that legislation to prevent it in future 
is probable. 

During the reign of George II., the British Parliament pi'ovided 
that the writ of execution for debt, to be issued in the Colo- 
nial Courts of America, should call for the sale of the lands and 
tenements of the debtor as well as his goods. In Great Britain, 
a land-holding debtor might be dissolute, insolvent, and bank- 
rupt, but no creditor could, or can to-day, obtain any writ of 
execution which will sell the debtor's land. Hence, there, ' ' once 
a landlord always a landlord. " If he bets away his fortune at the 
races, the return of his quarterly rent days will soon restore the 
means to bet again. In America, however, the largest landed 
estate is dissipated by the first spendthrift who comes into 
its possession, provided he become a bankrupt. 

In England, also, the law of primogeniture (preference for the 
oldest son) required the estate to descend to the eldest son only, 
unless it was otherwise disposed of by will. The law of entail 
also permitted the land to be so given by deed or will that oialy 
a life estate should at any time inhere in its present owner, the 
inheritable fee beingmt all times in the heirs in pei'petuity. These 
two laws tended still further to tie up the trade in land in 
England. In America, in all the colonies, or as soon as they 
became States, it was provided that all laud should descend at 
death equally to all children, and wills or deeds which tied up the 
title by entail, so as to render them untransferable for more than 
the lives of one, two, or three persons were made void. 

Throughout America, also, State, county, town, and school 
taxes rest directly on land, as a rule. If not paid, the title to the 
land is sold for the tax. In this respect the so-called land tax in 
England, which is only in law a tax on the occupant, though 
called a land tax, does not resemble the American taxes on land. 
In default of payment of the English land tax the writ for their 
collection is powerless to sell the land. It authorizes only a 
distraint on the goods and chattels of tlie occupant. It is a tax 
on occupation, not on ownership. 

In America, land is ever}^ where saleable for both taxes and 
debts. 

Bounty laws were, from time to time, passed, donating certain 



FREE LAND ATTRACTS. 145 

quantities of land, usually 160 acres or 80 aci'es, to persons who 
had served as soldiers or sailors in either of the wars of 1776-'83, 
of 1812-'15, of 1847 to 1848 with Mexico, or of 1861-'5 with the 
seceding States. Public lands were also donated to aid in the 
construction of canals, and section No. 16 in every township was 
donated to the support of schools. 

By an Act of Congress, also, lands proportionate in quantity to 
the representation each State had in Congress were donated to it 
for the endowment of an agricultural college. 

By all these causes, land was forced upon the market in quan- 
tities so that each man could get his 40, 80, 160 acres, half section 
or section of land at near the government price, $1.25 an acre, 
until the influx of " settlers " gave it a higher value. The first 
settlers, so far from fearing "monopolists," were glad to have 
either resident or non-resident capitalists buy in their neighbor- 
hood, as it tended to raise the value of the land, and gave them 
a class of taxpayers on whom they could freely levy for cost of 
schools, court-houses, bridges, roads, and local improvements. 
In some of the Western and newer States, local taxation, in the 
hands of resident voters, tended to throw as much of the burden 
of taxes as possible on non-resident owners of lands. The profits 
of land-owning were thus kept down to the minimum, and the 
inducement to monopolize land was small. It hardly became 
matter of complaint until about the year 1870. 

57. Effect of Free Land on Immigration. — Freedom 
of individual conduct and belief, equality in political rights, and 
abundant supplies of cheap land, supplied the chief inducements 
to immigration fi'om Europe down to 1851. Since then the gold 
and silver mines, the rapid px'ogress of railroad building, and the 
growth of manufactures, under the stimulus supplied by an 
abundant currency and a partial protection of American 
producers against the importation of competing goods, have 
largely increased the inducements to immigration previously 
existing.* Tlie rate of increase has been so evenly from 33 to 35 
per cent, in each decade that, as early as 1830 statisticians began 
to compute accurately the future rate of increase of the 
Republic. Dr. Carey, in 1835, placed the population in 1880 at 
60,000,000, which has been verified. Similar estimates show a 
population in 1930 of 191,000,000. This future rate of increase 



* Since 1790, when the first census was taken, the following table shows the increase 
in every ten years : 



146 



ECONOMIC! PB1L080PHY. 



of American population, if no great wars intervene, is one of the 
most demonstrable theorems in social science. 

Since 1819 a careful register of immigration has been kept, the 
result of which appears in the table contained in the note. 

By comparison of this table of immigration with the facts set 
forth in the chapter on " Commercial Crises," it will be seen that 
the movement of population into the country, while somewhat 
afl'ected by the Irish famine in 1846-9, was most rapid in the years 



Year. 

1790 

1800 

1810 

1820 

1830 

1840 

1850 

1860 

1870 

1880 

Tear. 

1830 . 

1821 . 

1822 . 

1823 . 

1824 . 

1825 . 

1826 . 

1827 . 

1828 . 

1829 . 
1830 

1831 . 
1832 
1833 



Population. 

3,929,827 

5,305,925 

7,239,814 

9,638,131 

12,866,020 

17,069,453 

23,191,876 

31,443,321 

38,925,598* 

48,141,800 



Per Cent. 



Extent of Territory. 
Tear. Eugl. Sq. Miles. 
1793 805,461 



35.03 
36.45 






33.13 







33.49 


1830 


2,150,000 


32.67 


1840 


2,308,362 


35.87 


1850 


2,743,500 


35.53 







23.79 


1870 


3,603,884 



Increase. 

1,376,098 
1,933,889 
2,398,317 
3,227,889 
4,208,433 
6,122,423 
8,251,455 
7,482,277 
9,216,223 

Immigrants. Tear. Immigrants. 

8,353 1854 427,833 

.... 9,130 1855 200,877 

.... 6,911 1856 200,436 

6,350 1857 251,306 

7,613 1858 123,126 

10,199 1859 131,382 

10,837 1860 153,640 

18,815 1861 91,920 

27,382 1862 91,987 

22,520 1863 176,222 

23,.322 1864 193,418 

.... 32,633 1865 248.020 

60,482 1866 348,554 

58,640 1867 298,358 

1834 65,365 1868 297,205 

1835 45,374 1869 385,387 

1836 76,343 1870 361,338 

1887 79,330 1871 367,789 

1838 38,914 1873 449,040 

1839 68,072 1873 437,004 

1840 84,006 1874 277,511 

1841 80,289 1875 209.036 

1842 104,565 1876 224:860 

1843 52,196 1877 130,503 

1844 78,615 1878 153,307 

1845 114,371 1879 177.836 

1846 154,416 18S0 4.57,257 

1847 234,968 1881 669,431 

1848 326,507 1882 738,902 

1849 297,011 1883 603,322 

1850 361,863 1884 518,592 

1851 379,466 1885 39.-),346 

1852 371,603 1886 ... 334,203 

1853 368,564 1887 ? 490,109 

Total since 1819, 

Of the total population in 1790, 17.8 per cent, were slaves. In 1800, 12.6 per cent, 
were slaves. 
* Including Indians and Alaska. 



P^RIOBB OF" INFLUX. 



147 



of money inflation, aiicl of great activity of the societary move- 
ment, wliethei' induced by protection, war, or increased production 
of gold and silver. While the magnitude of the immigration 
maintains a general increase in subsequent years over earlier, it 
more than doubles between 1826 and 1828, a period of protection ; 
doubles again in 1832— over 1831— drops slightly in 1833 on the 
passage of the Compromise Tariff; rises slightly in 1834, but drops 
sharply in 1835 ; attains a great height in 1836 and '37, and again 
in 1842, but drops one-half in 1843; i^esumes its upward course in 
1846; is heaviest in the periods of the Irish famine (1846-9), the 
revolutions in Europe, 1848, and the California gold supply, 1849 
to 1854 ; but in 1854, in the midst of this gold supply, it drops 
one-half, thereby showing that the condition of industries in the 
United States was then very bad. In fact, from the winter of 
1853-4 to the batik crisis of 1857 the manufacturing industries in 
the United States had been in a low, typhoid condition, owing to 
the causes named in our chapter on "Crises." From the high- 
water mark of 1854 the immigration declined, under the i^olicy of 
the almost free importation of foreign goods, from 427,833 in 
1854 to little more than a fourth that number in 1858-9. 
It sank still lower in the first two years of the war, but 
in the second two years it nearly resumed its former rate, but did 
not pass the rate of 1854 again until 1872 and 1873, which were 
years of marked activity in railroad building. The following 
static chart shows the rate for each year on a scale of 40,000 
population to the section line : — 



7.20 











~^ 


























~ 
















r- 










































































Rl 


5,2 


712- - 








- 
























































































































/ 






































































/ 
































































































































































































































































































































































3l3 


U 




















































f\ 


Ti 


g 


33 








^ 




































^ 


11 


,s 


3C 






















r\ 






\ 






































^ 




































































/ 




































































/ 




















J 












1/ 




































1 




















f 












-3£ 


>8r: 


>8 


1- 


- 
















































f 










































' 


















1 




























































\ 








/ 














V 






































1 
















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15 


7, 


77 


'> 
























7<5 


? 


4f 


^ 




















K 




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- 


' '. 








■— T>/ 


V 


V 






















91,822 
























^- 


1_ 









,9 


14 
















1 1 1 

























«0 00 O (N -^ to 00 



Immigration into United States from 1820 to 1887. 



148 ECONOMIC PHILOSOPHY. 

It is estimated that between the years 1820 and 1876 the immi- 
grants arriving were, as to nationality and race, as follows : — 

English and Irish 4,527,892 

Germans 2,889,235 

Swiss 77,299 

Austrians 49,793 

Swedes and Noi^wegians 263,994 

Danes and Icelanders . . . . \ .* . . . 41,417 

French 300,259 

Italians 56,874 

Spaniards and Portuguese , 34,717 

Belgians 21,498 

Dutch 42,401 

From Canada and British America .... 469,450 

West Indies 59,569 

Chinese 196,891 

Japanese . 337 

Officers in charge of the immigrants estimate the money brought 
into the United States by the immigrants for the ten years, 1850- 
1860, at £83,333,333. Prior to 1860 the sentiment of the country 
was in favor of immigration, and every immigrant was valued, 
though he brought only his muscular strength, as an accession. 
Since 1865 a sentiment has arisen in favor of an assorted immi- 
gration, to the exclusion, of Chinese, paupers, bound laborers, 
gypsies, persons bringing disease, and criminals. 

58. — Wasting the Ljaiid. — The opening up of new lands in 
America, and the denudation of timber, has been done in a way 
to sacrifice the largest future interests to the smallest present in- 
terests, which is the essence of waste. Dr. Franklin B. Hough, 
Chief of Forestry at Washington, estimates that in 1870 our entire 
area of remaining wood lands of every kind was 380,000,000 acres, 
that we were stripping the wood from 15,000,000 acres yearly, 
and were planting less than 10,000 acres. If these dates were cor- 
rect there has been a subsequent reduction of 160,000,000 acres, 
leaving 220,000,000 acres standing, or enough to last twenty- 
two years longer. It is also estimated officially that the 
mills of the Northern States, if they could be planted in 
the South, would saw up every standing pine in Florida or 
Alabama in twelve months, and would requii-e but six months 
more for that of Georgia or either of the Carolinas. Three 
hundred million dollars worth per year are being cut, of a 
crop which nobody is plantijig, not because it is not one of 



LOSS OF FORESTS. 149 

the most profitable of ci'ops, but because no private individual can 
afford to plant an agricultural crop which he must wait twenty- 
five years to reap. It is estimated that our white pine and 
spruce supply may not last a decade. Yet it is matter of easy 
computation that in thirty or forty years land in most parts of the 
United States, if left to grow up to timber, would, without labor, 
produce a cro^j the value of which on the stump, if spread over 
the period, would divide to each year about as large a return as 
can ordinarily be got out of the land by labor. 

All this points to substitution of brick, iron, straw pulp, and 
similar materials at an early date, for, wood. Foi'estry asso- 
ciations for planting trees have been formed in Ohio and elsewhere, 
but no effective check on the timber waste has yet been devised. 

The rapid destruction of the forests, of the Appallachian chain 
and Adirondacks, has also lessened the beauty and value of many 
American streams, by causing the entire waterflow occasioned by 
the meltmg of the winter snows to pass off in destructive freshets 
or floods in the spring, after which the streams are neai'ly dry. 
In the Ohio and Mississippi these spring floods are becoming each 
year more destructive of life and property ; and are suggesting as 
remedies either extended plans of n-rigation by canal, which will 
draw off these extra supplies of water, or systems of dams along 
the rivers to retain it, or a compulsory restoration of the forests. 

It is worthy of note that m China all these plans have been 
adopted. The fact that their river system is more nearly like 
ours, than that of any other country, may in time compel our 
legislation concerning rivers to more nearly approach theirs. 

The wasteful destruction of buffalo, deer, prairie pheasants, 
and other game on our Western plains, and of birds of every kind, 
and especially singing birds in the Western States, in response to 
the demand for birds for ladies' hats, are forms of waste for 
whose avoidance legal penalties have been invoked. 

In our streams and lakes the artificial propagation of fish has 
had the effect to partially restore the original supply. 

Marked economic effects have attended the building, or failing 
to build, important highways in the United States, of whatever 
kind, where opportunity and need existed. The early topo- 
graphical engineei'S of the country, including especially George 
Washington, who was an engineer by profession, foresaw that at 
whatever point on the Atlantic coast an outlet should be made for 
the products of the Mississippi and Ohio valleys, a great, probably 
the greatest, Atlantic seaport would arise. Virginia was at this 



150 ECONOMIC PHILOSOPHY. 

time fai' in advance of the other States, and especially of New 
York, as is shown by a call made by the General Government 
upon the States in 1781 for money. The sum to be raised was 
£1,666,660, and it wa_s divided among the original thirteen States 
according to the supposed value of their cultivated lands, since it 
was to be collected, by each State, by direct tax on land. The 
division was as follows :— 



Virginia, 


£272,415 


South Carolina, . 


£177,834 


Massachusetts, 


272,395 


New York, 


77,832 


Pennsylvania, 


233,498 


Rhode Island, 


45,142 


Maryland, 


194,582 


New Hampshire, . 


36,124 


Connecticut, , 


151,499 


Delaware, 


23,351 


New Jersey, . 


147,078 


Georgia, 


5,130 


North Carolina, . 


129,724 







Even in 1810 the city of New York had a population of 96,377, 
while Philadelphia had 96,691, Baltimore having 46,555, Boston 
32,250, New Orleans 17,212, Cincinnati 2,540, and Brooklyn 
4,462. It is difficult even at this day to perceive that Washing- 
ton's calculation, that the metropolis of the Atlantic coast would 
be at Norfolk, might not have been verified by sufficient enter- 
prise on the part of the people of Virginia. Washington urged 
the legislature of Virginia to build a canal connecting the Ohio 
River and the James or Potomac, so as to place the outlet at Nor- 
folk. His advice was not heeded. Subsequently New York, 
under the leadership of DeWitt Clinton, constructed the Erie 
Canal, connecting Lake Erie at Buffalo with the Hudson at Al- 
bany, then a stupendous feat of State enterprise in finance and 
civil engineering. Until that canal was built New York city had 
little more than the trade of the Hudson River Valley. The build- 
ing of the canal made New York the Empire State, and the city 
the commercial metropolis of the Union. 

59. The American Railway System in Its Unproductive 
Infancy. — American railways have passed through the several 
periods (1) of infancy and feebleness, demanding State aid at 
every step ; (2) of incipient profits and precipitate haste on the 
part of municipalities, couiities, and adjoining owners to embark 
in them for the value they would give to the lands adjoining; (3) 
of consolidation of continuous lines and pooling of competing 
lines, ending finally in a condition of stability, profit, and secur- 
ity; (4) of sevei'e criticism and assault on the part of shippers of 
freiglit as to the discriminations in freights and fai-es deemed 



WFANT RAILWAYS. 161 

necessary by the railways; (5) of enormous railway grants in aid 
of transcontinental routes of vast future importance ; and, finally, 
(6) of the appointment of State Boards of Railway Commissioners 
and the recent adoption of national legislation whose effects are 
not yet matured. 

At the outset, in the Eastern States, railroads crei^t feebly into 
being by scattered efforts, involving much individual sacrifice. 

Some town and county aid was given, or loaned, by subscrip- 
tions to stock and bonds. Frequently English loans were' ob- 
tained of money enough to buy the rails, or sales of the iron rails 
were made by English rolling mills taking stock or bonds in re- 
turn. In a rough way it might be said that individual enterprise 
bought the cai'S, town and county aid furnished the right of way 
and graded the roads, and English mills turned out rails in ex- 
change for the bonds. 

The first railroad projectors had no conception of the length of 
road required, and concentration of traffic essential, to make 
steam railways pay a profit. Many of them began with small 
capitals. The New York and Harlem Railway began (in 1831) 
with a capital of $350,000, authorized to construct a road from 
23d Street to Harlem River, about five miles. 

In 1836 the merchants of Baltimore, perceiving that the public 
works of Pennsylvania, and the Erie Canal, were attracting to 
Philadelphia and New York much of the tariff from the West, in 
which Baltimore had formerly participated, began to project a 
railroad which should connect that city with the Ohio, in lieu of 
the Chesapeake and Ohio Canal, which had been found to be a 
work of much difficulty, in consequence of the high elevations 
over which it had to be carried. At this date no railroad, either 
in Europe or America, had been constructed for the general con,- 
veyance of freight and passengers. In England an iron tramway, 
the Stockton and Darlington Railroad, had been constructed for 
carrying coal, and near Boston the Granite Branch Railroad for 
carrying heavy materials to tide-water. It was much mooted 
whether, in case railways should be adopted, horses or steam 
would be the better power. The Liverpool and Manchester 
Railway in England was, however, in course of construction, and 
2,000 miles of railway were projected. 

The first railroad charter, issued in the United States, was issued 
to the Baltimore and Ohio Railroad Company, at the solicitation 
of Philip E. Thomas, president of the Mechanics' Bank of Balti- 
more, its chief i^rojector. The State of Maryland voted aid to the 



152 ECONOMIC PHILOSOPHY. 

amount of $500,000 in 1828 ; work was begun amidst imposing 
ceremonies. Congress was prevented from voting aid only by 
the fact tbat the chairman of the Committee of Roads and Canals 
was also president of the Chesapeake and Ohio Canal Company, 
whose interests conflicted with, those of the proposed road. On 
July 4th, 1829, Charles Carroll of Carrol ton, whose remarkable 
signature adorns the Declaration of Independence, presided over 
the ceremon}" at the age of ninety years, remarking that he con- 
sidered the act second in importance, in his life, only to the signing 
of that Declaration, if, indeed, it was second to that. In the en- 
suing October, eleven and one-half miles were being graded, and 
one and one-half were ready for rails. Horses and mules were 
relied on for drawing the first ' ' brigade of cars, " the word train 
having not then been applied to this new use. Four brigades of 
cars each day were run between Baltimore and EUicott's mills, on 
July 5th, 1830. Locomotive engines had not demonstrated their 
capacity to attain a higher rate of speed than six miles per hour 
in England, until their use on the Liverpool and Manchester road 
in the same year. The company advertised for locomotives in 
1831, offering rewards of $4,000 and $3,500 respectively for first 
and second best, and in response to these bounties three engines 
were placed upon its track, one of which made a speed of thirty 
miles per hour. 

In 1832 the further building of the road was arrested by a 
decision of the Maryland Court of Appeals that the Chesapeake 
and Ohio Canal had a prior and exclusive right of way over that 
portion of the route lying between Point of Rocks and Harper's 
Ferry. In 1833 this difficulty was compromised, by the company 
assuming the State's obligation for 2,500 shares of the stock of the 
canal company, when the canal reached Harper's Ferry. The 
company were the first to insert steel springs under the locomo- 
tive tenders and burden cars, thereby saving one-third in cost of 
carriage and wear and tear. In 1835 the Washington branch 
was opened and carried 200 passengers daily. In 1835-6 the 
legislature of Maryland subscribed $3,000,000 to the capital stock 
of the road, as did also the city of Baltimore. In 1 838 surveys 
had been completed to the Ohio River at Wheeling ; the cost of 
the road was estimated for the whole route from Baltimore to 
Wheeling at $9,500,000, and the legislature of Virginia subscribed 
$1,058,420 toAvard the capital stock, being two-fifths of the esti- 
mated cost of so much of the route as lay within the State. In 
March, 1853, the road was opened to Wheeling on a running 



STATE AID. 153 

schedule of nineteen hours, and had cost $15,000,000, or about 
$40,000 per mile. 

The Mohawk and Hudson River Railroad Company, forming the 
first link in the present New York Central and Hudson River, was 
constructed to run from Albany to Schenectady only, seventeen 
miles, and partly by stationary engines. It was authorized in 
1826 and opened for traffic in 1831. The present New York Cen- 
tral, without its Hudson River or Harlem branches, comprises 
what were built as twelve independent roads. The present Boston 
and Albany Railroad Company originated in a project formed in 
1791 by General Henry Knox, who with his associates were incor- 
porated in 1792, with power to make a canal from Boston to the 
Connecticut River. The project languished until 1825, when 
Governor Lincoln in his message to the legislature called atten- 
tion to the importance, to the agricultural and manufacturing 
interests of the intei'ior, of means of transportation to Boston. 
It was also suggested that "railways" might be substituted for 
the canal. Dr. Phelps, a member of the select committee, had 
himself worked the Quincy railway by horse power, and advo- 
cated the new railway idea, in which he was greatly encouraged 
by the opinion expressed by Mr. Daniel Webster in favor of its 
feasibility. The Boston and Worcester Road, the first built in 
Massachusetts, was chartered in 1831 and completed to Westboro, 
thirty-four and one-half miles, in 1834, with a capital of 
$1,000,000. 

In March, 1833, persons who were directors in the Boston and 
Worcester Road formed the Western Railroad Corporation, to 
construct a connecting road from Worcester to Springfield. The 
legislature passed almost unanimously, and on the recommen- 
dation of the Governor, an act allowing the State to subscribe for 
stock to the amount of $1,000,000. 

Rival jjroposals, to build a direct road from Worcester to Hart- 
ford, were defeated in the legislature, as interfering with this road. 
In 1837 the State was further authorized to loan its credit to the 
extent of 80 per cent, of the capital stock of the road, or $2,100,000. 
And in 1839 the State credit was further loaned in scrip to the 
amount of $6,200,000. The object of the Boston capitalists was 
to secure a direct line from Boston to Albany by connecting with 
the Albany and West Stockbridge Road, in behalf of which the city 
of Albany had agreed to subscribe $650,000. This was seven years 
in advance of the New York connection. The extension of the 
New York and Harlem road to Albany was not pi'ojected until 



154 ECONOMIC PHIL 080 PHY. 

1845. The legal limit of the Harlem had been in Westchester 
County at the Connecticut State line. Opposition to the Albany 
indorsement, by the New York merchants, ultimately obliged the 
Massachusetts road to assume the financial responsibility of com- 
pleting its extension to Albany. 

In New Jersey the Delaware and Raritan Canal Company was 
incorporated in 1830, also with a capital nominally of $1,000,000, 
but was authorized when $25,000 of cajiital had been paid in to 
build a canal between the Delaware and Raritan rivers. In the 
same year the Camden and Amboy Railroad and Transportation 
Company was incorporated with the like capital of $1,000,000, 
divided into shares of $10,000 each, to build a railroad from the 
Delaware River to Raritan Bay, with a lateral line to Borden- 
town, the State to have the privilege of subscribing for one-fourth 
of the capital, and in that case was to have two directors, or, if it 
subscribed for less than one-fourth, its number of directors was to 
be in the same proportion as the number of shares subscribed for 
by the State bore to the whole amount of stock. The State was 
also to have the right to take possession of the road as its own, at 
the expiration of thirty years from its completion, by paying its 
value, as it should be appraised by special commissioners, to be 
appointed equally by the State and the stockholders. The road, 
from its completion, was to make quarterly returns to the State, 
and to pay to the State in lieu of all other taxes ten cents on each 
passenger and fifteen cents for each ton of merchandise transported. 
But if the State should authorize the construction of any other 
road across the State from New York to Philadelphia, to com- 
mence or terminate within thi-ee miles of the commencement and 
termination of the Camden and Amboy Railroad, then the payment 
often cents for each passenger and fifteen cents per ton for each ton 
of freight should cease. In 1831 the act was so amended that the 
company presented to the State 1,000 shares in lieu of the pro- 
posed subscription by the State, and that the ten cents per pas- 
senger was to be paid only on passengers carried across the state 
from New York to Pennsylvania, and not on passengers starting 
or stopping in New Jersey. Thus, instead of the State aiding the 
construction of the road, it imposed itself as an incubus on the 
road, and made it the medium of sustaining in part its own State 
government, by imposing a tax on the transit, through New Jer- 
sey, of the citizens of other States. A similar "deal " or partner- 
ship, in which the State put in only its skill and not its capital, 
was made by the State with the New Jersey Railroad and Trans- 



LAND GRANTS. 155 

portation Company, which in 1832 was incorporated (capital 
$750, 000) to build a railroad from New Brunswick to Jersey City. 
The State reserved also the privilege of becoming proprietor of 
the road at an appraised value. 

In Pennsylvania, in 1831, a railroad from Philadelphia to Mor- 
ristown, seventeen miles, with a branch to Germantown, three 
miles, was authorized, and soon after was built without State aid. 
The Cumberland Valley Railroad, authorized in April, 1831, to 
be built from Carlisle to Harrisburg, gave the State the right to 
take its property at an appraised value, and, not being able to 
build itself, in 1838 obtained from the legislature an act author- 
izing the governor to subscribe on behalf of the common- 
wealth for 2,000 shai'es at $50 per share. In 1845 the road lost its 
bridge over the Susquehanna, and the State, as a measure of relief, 
presented the stock which it held to the company, the proceeds 
of its sale to be used in rebuilding the bridge. In Illinois, in 1851, 
the Illinois Central Railroad was begun, by a national and State 
grant of land in aid, conditioned that the company should pay into 
the treasury 6 per cent, per annum on its gross earnings. The 
land formed the chief source of credit for the $32,000,000 which 
have been issued towards its construction. The proceeds of sales 
of the lands have paid off nearly all the bonds, and will pay off 
the remainder by 1890. The road was largely built with English 
capital. Richard Cobden, the leader of the English movement 
for the withdrawal of protection from the English and Irish 
farmers, and who was himself a cotton manufacturer, is reported 
to have sunk in the Illinois Central Railroad shares upward of 
$80,000. Prior to 1860-4 nearly every other line of American 
securities was deemed safer than railways. To invest m them at 
all was not " legitimate " business, and tended to shake the credit 
of the investor. Two or three successive sets of stockholders fre- 
quently lost the value of their stocks before any stock came to 
have a sustainable value. The profits of the railway business 
were almost confined to those who negotiated foreign loans upon 
them, and then foreclosed in behalf of these loans, on the mari- 
time principle that the last salvor has the first lien. 

60. The Era of Consolidation. — In 1851, partly in con- 
sequence of the inflow of gold from California, began a series of 
consolidations of continuous lines of railway, which marked the 
close of the first and beginning of the second railway epoch. The 
consolidation of lines between Albany and Buffalo into the New 
York Central, in 1853, began one of the great trunk lines. In 



156 ECONOMIC PHILOSOPHY. 

1846 tlie Pennsylvania Railroad Company had been foi'med to 
construct a line from Harrisburg to Pittsburg. In 1848 the cities 
of Pittsburg and Alleghany, and of Philadelphia, and all inter- 
mediate counties, were authorized to subscribe for stock in the 
road, and the State reserved the power to take the road at cost 
and eight per cent, interest at the end of any period of twenty years. 
The company was authorized to guarantee the bonds of roads in 
other States which might become feeders to it. In 1857, the State 
sold it all the public works of which it had itself become owner, 
including two railroads and three canals, for $9,000,000, and 
exempted its property in future from all taxes, except those 
levied for school, township, and borough purposes. 

The Erie Railway, incorporated in 1833, had carried its track 
only from Piermont on the Hudson to Goshen in the adjoining 
county in 1841, being at the rate of about one mile per year. It 
reached Middletown in June, 1843, Port Jervis in January, 1848, 
Binghampton in December, 1848, Elmira in October, 1849, Cor- 
ning in January, 1850, and Dunkirk, its western terminus, in May, 
1851. In 1852-55 it was forming a direct connection with Jersey 
City, by which it became embarrassed, and from 1859 to '61 was in 
the hands of a I'eceiver. This, however, was the third of the 
great trunk lines, to which the Baltimore and Ohio, completed in 
1853, added the fourth route. The Great Western of Canada, pro- 
jected in 1845, from Niagara River to Lake Huron, and completed 
at a cost of $25,000,000, formed, with the Michigan Central and 
New York Central, the first complete through route from New 
York to Chicago. The Grand Trunk, projected in 1852 and com- 
pleted at a cost of $29,000,000 from Portland through Montreal 
and Toronto to Chicago, now forms the fifth trunk route. With 
the creation of these five trunk lines closed the second period of 
railway development. The period from 1859-64 was that of the 
transition, of the older and more eastern and central rail- 
way entei'prises, from a condition of failure and insol- 
vency to one of success and fortune-making. In the dis- 
tricts and counties not yet supplied, there was an ardent de- 
maud, impelled often to rashness, by the feeling that 
they were losing population, wealth, and progress, and being left 
behind in the march of prosperity by their more fortunate neigh- 
bors. To be near a railway was to get larger prices for all crops 
and cheaper supplies — therefore to grow rich. To be distant from 
railways meant burning one's corn as fuel and paying dear for 
supplies — hence to grow poor. Hence the desire for railways led 



NATIONAL AID. 157 

towns and counties to apply to legislatures everywhere, but 
especially in the Western States, for acts giving them leave to is- 
sue town and county bonds in aid of railways, to subscribe to 
shares of stock or to assess themselves for the cost of grading 
roads through their own limits. These acts being liberally passed, 
many cities, towns, and counties ran into debt. In some cases 
the railways desired were built. In others there was disappoint- 
ment, failure, and a struggle to avoid paying the loans. This 
ended in many of the Western States passing constitutional pro- 
visions, prohibiting towns and counties issuing bonds or sub- 
scribing to shares of railways, just as they had previously 
prohibited the creation of State banks, and for like reasons. In 
some cases the prohibition was absolute. In others it permitted 
the aid to be extended where it had first been voted on at the 
polls. 

61. Great Land Grants to Railways.— Simultaneously 
with this epoch of transition from failure to prosperity from 1859 
to 1862, Congress had been called on to make numerous grants of 
lands to the States in order that the States might grant them to 
railways. The first of these grants by Congress was to the State 
of Illinois, in 1850, for the Illinois Central. Twenty-nine Acts of 
Congress had, in 1874,* been passed, whereby lands had been 
granted to sixty-eight railway enterprises. 

It is estimatedf that 255,000,000 acres had been granted in 1883 
by the General Government and the State of Texas, and that re- 
ductions by forfeitures, etc., will still leave 185,000,000 actually 
conveyed. About one-half has gone into the hands of the five 
great corporations, as follows: — To the Central Pacific 15,260,000 
acres; the Union Pacific 16,115,000 acres; the Northern Pacific 
42,000,000 acres; the Atchison, Topeka, and Santa Fe 25,667,200 
acres ; the Texas Pacific 13, 000, 000 acres. Total, 112, 042, 000 acres. 
A belt eighty miles wide, extending from near Lake Superior to 
tlie Pacific Ocean, covering the very best agricultural, pasture, and 
timber lands, was granted to the Northern Pacific Railroad 
Company, which, notwithstanding the grant, failed under Jay 
Cooke, and continued little better than in a mendicant condition, 
until its second organization under Villard, or from about 1870 to 
1878. A belt forty miles wide, from the Missouri River to near 
the Bay of San Francisco, is held by the Union and Central 



*Poor'8 "Manual of Railroads," p. 663- 
t Moody's "Laud and Labor," 101. 



158 ECONOMIC PHILOSOPUY. 

Pacific Comx:)anies. The Western and Southern Pacific 
Companies control a line extending longtitudinally through 
California. The Atchison, Topeka, and Santa Fe have a belt forty 
miles wide, stretching thi'ough Kansas into Colorado and New 
Mexico, towards Arizona and Mexico. The Atlantic and Pacific 
Company own a belt eighty miles Avide, extending across New 
Mexico and Arizona to near the Pacific. 

For the first twelve years of the system of national aid to rail- 
ways, viz. , from 1850 to 1862, the grants were in all cases made by 
Congress to the several States and by the latter to the railway 
companies. On July 1st, 1862, Congress made its first grant of 
lands direct to coi'porations, in the cases of the Union and Central 
Pacific Companies. In the earlier grants but six sections of land 
per mile were granted. In the later the grant rose to forty per 
mile. Assuming the areas actually conveyed under these grants 
to be 185,000,000 acres, they amount to two-and-a-half times the 
total area of Great Britain and Ireland(74, 137, 600) . The thirteen or- 
iginal States of the Union have 204,001,280 acres, or but little more 
than the quantity thus conveyed. The Empire of Austro-Hungary, 
the Kingdom of Italy, with Switzerland and the Netherlands, have 
250,112,720 acres, and the Empire of Germany, with Italy, 
Portugal, Greece, and the Swiss Republic combined, have 
251,163,520 acres. Meanwhile, with the war period and the jDolicy 
of concentration above referred to, the great upbuilding of manu" 
factures, cheaj)ening of iron, and increase of travel, the railroads 
passed out of insolvency and became magnificent fortunes to 
nearly all who were interested in them. The rate of construction 
rose until, from having only 29,000 miles of poorly equipped road in 
1860, laid mostly with iron rails, there were in 1880 112,000 miles, 
about one-half of which were laid with steel rails, and the manu- 
facture of locomotives and rolling stock had become the best 
extant. Even our mileage of railroads laid equaled that of all 
other nations combined. 

62. Socialistic Reaction against Railways. — No sooner 
had the railroad investments emerged from their period of bank- 
ruptcy into one of prosperity than several modes of popular agi- 
tation arose, based on their alleged abuses and mismanagement. 
Associations of farmers, calling themselves grangers, began form- 
ing in 1864-5 in the Western States, to oppose the policy of the roads 
in charging at a lower rate per ton per mile for loiig hauls of 
freight than for a short one. At first the legislatures attempted 
to fix rates of freight and fares for roads. Tlie efl:"ort ended, how- 



STATE REGULATION. 159 

evei*, iu the designation of State Board of Railway and Warehouse 
Commissioners to do so ; and when these had been appointed and had 
acted iu most of the raih-oad States for several years, the demand 
for State regulation assumed the form of a demand for National 
regulation. Bills were introduced into Congress which proposed 
that, under the power conferred on that body to regulate commerce 
between the several States, Congress should assume a national 
charge of the rates for transportation, on all railways and railway 
systems, which by consolidation, " pooling receipts," or other con- 
tracts between the roads, had become inter-State lines. This was 
opposed by railway managers, partly as being impracticable in 
itself, for lack of foreknowledge on the part of Congress of the 
many exigencies required to be considered to avoid great obstruc- 
tions to railway business, partly from the fact that it would leave 
lines which lay wholly within one State, like the New York 
Central and Pennsylvania Central, an unfair advantage over their 
competitors, the Erie and Baltimore and Ohio, which lay in several 
States, and would act as a stimulus to the Grand Trunk Railway 
of Canada, which had its termini in Chicago, 111., and Portland, 
Me., but most of its route outside the Union, since Congress 
could pretend to no control over either of these classes of roads. 

There has also developed, since 1860, a State socialism concern- 
ing railways and telegraphs, which finds expression in a desire 
that these works shall be owned and run by the nation at lai^ge. 
The extent of the feeling in favor of such a change can not be 
numerically stated with accuracy, but it is large when the profits 
of the business are large, and disappears as the railway and 
telegraph investments pass into a period of disaster. 

As in the similar case of the socialistic desire to nationalize the 
lands, mines, etc., some of the socialists believe the present 
rights of owners should be respected, and that they should be 
paid for their property. Others say that, as private title to lands, 
railways, and all other capital, is, according to their theory, 
only a robbery from the beginning, to pay for nationalizing the 
lands and railways, by distributing among their ])resent owners, 
an amount of new national bonds equal to their present value, 
would only be to perpetuate the crime. The nationalizing of 
the railways, telegraphs, and lauds, by issuing national bonds 
in payment for them, would involve an issue of bonds to 
the amount of at least one-half the total wealth of the nation, 
or say, $25,000,000,000, being about ten times the quantity of 
debt incun-ed to defeat the Southern secession. 



160 ECONOMIC PHILOSOPHY. 

63. Objections to Socialistic Theories Concerning' 
Railways. — The effective answer to the objection that railway 
concentration gives a few persons the power to raise freights and 
fares has been, that in the degree that they have been controlled 
by a few persons, they have reduced the rates of freight and fare. 
When it has been urged that the post-office illustrates, by its 
cheap postage system, how admirably the government is adapted 
to take charge of railways, it is replied that the government, by 
its postal department, only sorts the letters, and that the 
railways themselves carry them. In looking back, it is per- 
ceived that courts and legislatures set their faces honestly but 
crudely against railroad consolidation, and held, to the end, 
that any one stockholder, objecting, had the legal right to pi'event 
the others from effecting the consolidation. But courts and 
legislatures, herein, served the cause of production less wisely 
than the railways. When one set of shippers has risen uj) to 
demand that railways be forbidden to get traffic where they can, 
by making such reductions in rates as will secure the traffic, even 
though they cany for one shipper a great distance for less than 
they charge another for a short one, another, and usually a more 
powerful class of shippers, has demanded that they be given the.se 
low rates on the long hauls. When objection has,been made to the 
issue of an excessive quantity of stock, it has been met by the prop- 
osition that the aggregate dividends a free railway can pay are not 
increased by the issue of stock, since this can have no effect either 
to expand the earnings, or diminish the expenses of the road. 
Dividends can only come from the excess of earnings over ex- 
penses. A long period of agitation, for the legislative reduction 
of rates, has been suddenly arrested by the spectacle of millions 
of capital squandering itself in carrying freights and passengers 
for rates so low as to work a rapid impairment of the value of 
the stock. A recent shrinkage of one-third* in the railway 
values generally, both in England and America, has done much 
to destroy the temptation to socialistic agitation for the control 
of railways by the State. 

Indeed, hai'dly had the agitation in behalf of national control 
of railways reached tliesarface, when railway owners were found 
tentatively encouraging a scheme Avhich would enable them to 
" unload" their property, by turning it over to the government. 
Speculations in favor of a system of opening all railways to com- 

* In lSS-1. 



INTER-STATE COMMERCE. IGl 

petition, between the ears, engines, locomotives, etc., of cora])et- 
ing lines, have been indulged in by various writers. In this, as in 
relation to land, it seems thus far as if title in one best preserves 
the use to many. In land, there is no mode so effectual to 
exclude each from the effective use as to vest the title in all. In 
railways, it may also a]3pear that private profit is the only induce- 
ment adequate to supply them in the degree which shall give 
society their most advantageous and abundant use. 

The latest outcome of the desire that railways shall be regu- 
lated as to their charges and services by government supervi- 
sion, instead of by their owners' sense of profit, is seen in the 
Inter-State Commerce Law. Thus far, the law has given rise to 
a sort of exchange, for the acquisition of infox-mation concerning 
the railroad business, and the removal of errors concerning pos- 
sible modes of reform. As a rule, the intended reformers have 
furnished most of the errors needing correction, and the officers 
of the various railways have supplied the facts i^equired to coi-rect 
these errors. 

The lovers of good and }3ure English, among whom the fram.ers 
of the Constitution were conspicuous, can not fail to feel their 
teeth set on edge by the audacity with which a majority in Con- 
gress has assumed that it could cause the word "commerce " in 
the Constitution to include " transportation " by simply enacting 
it. Commerce is a change of ownership in products, and may be 
vpithout change of places. Transportation is change of place, and 
maybe without change of ownership. "Commerce between " 
(the people of) " different States " may imply that transportation 
will occur as the means of completing the exchange. It certainly 
does. But the meaning of the two words is as distinct as title is 
from locality. But a clause in the Constitution, authorizing 
Congress to regulate exchanges of goods between citizens of dif- 
ferent states will doubtless continue to be construed to authorize 
Congress to regulate the mode of doing business by the corpora- 
tions that carry the goods. 



CHAPTER V. 



PEOFIT AND LOSS. 

64. The Beginnings of Industry. — Industry, in any 
proper sense of the word, develops, as wealth and values do, only 
with civilization. Savageism is a condition of intended indolence, 
broken only by the exertion rendei-ed necessary as the alternative 
to immediate want of food, clothing, or shelter. The savage stops 
work when these wants are sufficiently supplied to yield him 
time for slumber or debauch. Such labor as is performed in 
savage life consists almost solely in the toil of appropriating or 
reducing to possession the wild game and fish, in capturing which 
a day's labor may be required to successfully appropriate enough 
for a meal. The entii'e toil of savages, therefore, in hunting, 
fishing, digging roots, and picking berries, consists of appropria- 
tion, which is not yet differentiated from production, and largely 
of a form of labor to which the well-to-do and nobles of aristo- 
cratic civilization return as the highest form of sport. Title, 
possession, and enioyment are acquired by one act, and that an 
act of manual force. No anterior pains have been taken by the 
savage to cause his game, fish, berries, or roots to exist. 

So far as industry consists of mere appropriation, man's life does 
not rise above that of the beast of prey, and falls below that of the 
agricultural ants, which keep flocks and plant rice, and below the 
bees who collect and store honey and practice division of labor. 
The principles of accumulation, and of the organization of labor 
through rank, force, or slavery, evidently do not originate with 
man, but are amply illustrated in many orders of animals. They 
are, therefore, instincts of the animal organization, and not human 
inventions, or elements of character which man can choose 
whether he will have or dispense with. 

When the savage ceases to be content with appropriating the 
means of food, clothing, and shelter, which can be had by hunt- 
ing, fishing, digging roots, and snaring birds, and begins to plant 
seeds, dig the ground, tame and herd his wild goats and sheep, and 
set out fruit trees, he becomes a producer, and the form of his toil 
changes from hunting and fisbing to industry. Production and 



titRJURS ANi) LABOUPJUS. 163 

industiy, therefore, imply a degree of i^rovideuce or forethought, 
in the production of things not immediately enjoyable; which 
forethought, and care for the future, are the germ of civilization. 

65. Capital and Labor Part to be Partners. — Simul- 
taneously with this beginning of industry, values or possessions 
divide into two kinds, viz., the enjoyable and the reproductive. 
The game which js shot is the enjoyable wealth. The bow and 
arrow used in shooting it are the reproductive. The former is 
exhausted by a single use, but ministers directly to human sus- 
tenance or comfort. The latter is capable of a long period of use, 
and only ministers indii-ectly to human want. The former is re- 
ward for effort, and a]Dproximates more or less closely to wages ; 
the latter is means of production, or of appropriation, and soon 
begins to be called capital. The former is perishable, and must 
be used, if at all, immediately. The latter is persistent and may 
be used indefinitely. To work with the latter (re^Droductive 
Avealth), to obtain the former (means of consumption), is industry. 
The man who owns his own implements of industry is said to be 
his own employer. If he does not own his own implements of 
industry, but is furnished them by another, and keeps the product 
of his industry, some I'eturn to that other is made for the loan of 
the implem.ent. This return may be called rent if it be land 
leased, interest if it be money loaned, or profits if it be merchan- 
dise sold. If the worker with another's implements surrenders the 
product to the owner of the implements, the latter makes a return 
to the former for his work, which may be called also share, profit, 
or wages. If this I'eturn to the worker is proportionate to the 
value of the product obtained it is called share or profit. If it is 
irrespective of the j)roduct, but a definite payment for time and 
labor expended, it is called wages. The person owning the imple- 
ments of industry, and employing others to work for him at 
wages, is called the investor, capitalist, enterpriser {entrepreneur 
Fr.) contractor, or employer. From the time the two functions of 
owning the means of labor, and furnishing the labor, become 
separated between two persons, the term industry covers the joint 
co-operation of the two ; the term enterprise covers the function 
of the contributor of the capital or means of industry, and the 
term labor covers the act of working for wages, hire, or share. 

This division of men into those able to pay wages,* and those 

* " The ultimate partners in any production may be divided into two classes, capi- 
talists and laborers. If the distributor be the capitalist, the share of the laborer is 
called wages. If the distributor be the laborer, the share of the capitalist is called 
either interest or rent." (Hearu's " Plutology," pp. 325-7.) 



164 ECONOMIC PHILOSOPHY. 

compelled to work for wages, arises in a state of developed or free 
society, and where labor is organized by capital, irresistibly out 
of the fact that of two persons having an equal start, one will 
hoard while the other spends, and the one will make while the 
other loses, until it comes to pass that one is able to employ while 
the other is glad to be employed. 

Historically, however, the relation of employer and wages- 
worker, when traced backward, does not find its origin in any 
primeval Eden of social equality, but arises gradually in most 
cases out of an antecedent condition, a little more despotic and 
enslaving, known as boss and journeyman; and this originates in 
one still more arbitrary known as master and servant ; and this 
in that of lord and vassal, until we get back to liege and bond- 
man, and thence to patrician and slave (in Rome), citizen and 
helot in Grreece, man and chattel nearly everywhere. The in- 
equality deepens as we ascend to more primitive eras, until we 
reach a condition where the owner has every power over his 
working man, whether of death, mutilation, or sale, that he would 
over his ox. The races wherein the love of personal liberty pre- 
vented this degree of subjugation remained nomadic, unorganized, 
or merely tribal. If the sj)irit of subserviency facilitated such a 
despotic organization of society, as it did in India, Persia, Egypt, 
Babylon, Grreece, and Rome, then national greatness was readied, 
at least in part, through a subordination of individual freedom 
that seemed to enslave all, even those that ruled. 

The process by which despotisms thus organized emerged into 
the condition of wages-paying nations of employers and em- 
ployed, was sometimes by sudden convulsion, as in the United 
States (South) in 1860-65, but generally by the gradual substi- 
tution of money for force, through the increase in the volume of 
the former, and through the greater economy of money than of 
force, in securing that subordination of will and concurrence of 
purpose without which there can be no extensive co-operation of 
labor. 

66. Organization of Labor by Force. — In speaking of the 
oi-ganization of society by force, rank, or money, it must not be 
supposed that, in the period of force, force itself has the same dis- 
tastefulness which it comes to have in the wages period. It is in 
the natui'e of the servile to be proud of their relations to those 
they serve, and to be happy in feeling that their lives are linked 
to a more stable means of subsistence than they could find in their 
own efi'orts. The henchman was proud of his laird, the page 



FROM FORCE TO WAGES. 105 

loved and honored his knight, and the slaves in many Southern 
families took intense pride in the families owning them, as do 
to-day the hereditary servants among aristocratic families every- 
where. 

The transition from the oi'ganization of labor by force, to that 
by wages, is sometimes made through a substitution of rewards 
in lieu of punishments, until these rewards, by custom, assume the 
foi'm and regulai'ity of wages. The master, in warlike periods, 
getting a new swoi'd, presents his old one to his servant, who 
esteems the honor of wearing his master's sword as a species of 
knighthood. Or, in industrial periods, the master presents his 
servant with a house and garden, or, as in many Southern in- 
stances, even makes him ruler over other servants and foreman in 
his household. Thus the habit of command gradually gives way 
to that of pui'chase, and the habit of servility to the sense of in- 
dependence. But presents, "tips," etc., remain to indicate the 
earlier system of favors or perquisites. Under the system of 
jiegro slavery in the United States, some of the slaves would get 
more material comforts by this system of presents, tips, and 
favors, than they could afterwards earn as wages. They would 
appear in their master's clothing, and jewelry, after it had been 
slightly worn. They had the advantage of medical attendance 
in sickness, and of an a,ctive interest in their health and welfare, 
which disappeared when they came to receive wages. 

Stanley, in making his tour across the Dark Continent of Africa, 
bound himself to treat his 280 black servants, whom he employed 
to accompany him, kindly, to nurse and care for them in their 
sickness, to defend them against enemies, and "to be a father 
and a mother to them. " The serfs and villeins of the feudal time, 
in entering the contract of homage or service, knelt on the ground 
before their protector Avith both hands in that of the master, and 
promised to be "his man, in life and limb and terrene honor.'' 
Where vassalage is thus implied on one side, and protection on 
the other, the wages system can hardly be said to have begun. 

When the chief and his soldiers settled on the land, the ex- 
change was at first a rent service, but gradually the element of 
sei'vice disappeai'ed from rent, and it became a payment for the 
use of land. If the tenant's services were wanted they were at 
first compelled, and later employed. When society became so 
addicted to commerce that the laborer's time was bought and paid 
for like any other commodity, according to the relation which 
the quantity offared for sale bore to the quantity of money em- 



IQ^ ECONOMIC PHILOSOPHY. 

ployers were willing to pay, various theories succeeded each 
other as to the proper basis on which rates of wages should be 
determined. In the military and knight-errantry, feudal and 
baronial stage, it was held that the lord should have what befitted 
his station, and he took pride in seeing that his servants and re- 
tainers had what was befitting their station. The principle was 
equality as to substantial essential to life and comfort, discrim- 
ination as to the accessories which denote rank. This truth is 
accurately portrayed by Shakespeare in the crowning humiliation 
which overwhelms King Lear when he learns that his ungrateful 
daughters purpose to limit him as to his retinue of servants and 
as to their right to make merry over their wine. Abraham and 
Lot part company as much for their servants' welfare as their own. 
When the relation of master and servant was one of social rank, 
it was the master's pride and part of his means of control to pro- 
vide for his servaiit as liberally as his station would permit. In- 
deed, the chief source of bankruptcy consisted in attempting to 
provide for more domestics and attendants than the master's in- 
come could be made to cover. 

In getting upon the commercial basis, the English statutes show 
that for centui'ies it was assumed to be the duty of the ruling 
gentry to regulate hours of labor and rates of wages, always by 
enacting that they should not exceed certain rates, and by for- 
bidding unions of workmen to obtain more. In no instance, says 
their chief historian* f did Parliament legislate to raise rates of 
wages, nor to restrain conspiracies among employers to keep them 
down. 

At last, by the absorption of the land by the wealthy, the dis- 
possession of the poor from their customary holdings, the rise of 
the factory system, and the growth of the capitalists and the 
wages class into widely separated and unsympathetic classes, labor, 
or more properly labor-time, became a commodity. Economists 
found an avei-age rate of wages existing in each trade, about as 
steady as prices of goods or food or the value of money. What 
fixed this rate ? 

67. Adam Smith on Wages. — Adam Smith made a curious 
mixture of the errors which attend unrestrained a priori reason- 
ing, and the felicitous effects of shrewd observation, in his 
" Chapter VIII." on the wages of labor. He began by supposing 



* Thorold Rogers' " Six Centuries of Work and Wages in England." 
t Adam Smith's " Wealth of Nations," by McCullough, p. 30. 



WHEN LABOR PRODUCES. 167 

an ''original state of things which precedes both the appropria- 
tion of land and the accumulation of stock" (capital), when he 
said " the whole produce of labor belongs to the laboi'er." From 
this beginning he proceeded to treat labor as the one producer, 
and landlords and profit-makers as the sources, not of production, 
but only of deduction from what labor i^roduced. 

This beginning overlooks the historical fact that in most races, 
if not in all, history opens with the fact that the laborer is the 
first property to be appropriated — slavery preceding often the 
appropriation of the land, and the ownership of labor being the 
first form of circulating capital. This was wholly the rule among 
the Egyptians, Greeks, and Romans, and largely so among the 
Asiatic races. If there was any early golden age among the 
Germans and Saxons wlien labor was not owned, it disappeared 
before Eoman conquests and feudal institutions. 

Dr. Smith then sa^'s : "It seldom happens that the person who 
tills the ground has wherewithal to maintain himself until he 
reaps the harvest. His maintenance is generally advanced to 
him from the stock (capital) of a master, the farmer who employs 
him, and who would have no interest to employ him unless he 
was to share in the produce of his labor, or unless his stock 
(capital) was to be replaced to him with a profit. This profit 
makes a second deduction from the produce of the labor which is 
employed upon land." * 

Dr. Smith gets at the nugget of the truth which he seems deter- 
mined to ignore. He assumes that his laborer is a destitute per- 
son, without land, implements to work with, or the means to sub- 
sist him until the harvest is reaped. In fact, his so-called laborer 
is not a laborer at all, but a helpless, suffering image of destitu- 
tion, lacking the land to labor upon, the food to sustain himself, 
or the implements to work with. Is he in this condition a pro- 
ducer ? Certainly not, x\ll that he can produce is famine. The 
landlord who, in this stage of his fate, advances him land to work 
upon, and the farmer who gives him means and subsistence while 
he labors, are the true producers of his work. In this case, and 
in all in which the laborer is wholly destitute, he has not the 
initiative in production, but must be initiated from without, as 
truly as must the labor of an ox, mule, or engine. 

Only that can be said to be the producer which has the power 
jper se to initiate production. Since, of the three forces at work, 

* Rent of the land on which he labor:- being the first. 



168 ECONOMIC PHILOSOPHY. 

the landlord, the farmer (or capitalist), and the laborer, the 
second is the one who initiates production by hiring the land and 
employing the labor ; and since, as Dr. Smith perceives, the mo- 
tive to him is profit, evidently Profit^ though it may be the last 
element to be counted out, into the hand of its recipient, when the 
product is sold, is the first to inspire the production. 

It is Profit* that hires the land and agrees to pay the rent. 
Profit fences it, drains it, manures it, plants and cultivates it, and 
markets its product. Profit picks up the destitute j)auper from 
the highway and converts him from a hungry appetite, ready for 
crime itself, unless he can be fed, into a laborer co-operating in 
producing commodities for which there is some demand. For 
the destitute man, as a mere walking appetite, there may have 
been so little demand that parishes would compete to crowd him 
on each other, and emigration committees would woo him to 
leave the country. Pagins would tempt him, judges would 
gladly banish or serenely hang him, and poets would write 
I'hymes upon him as perhaps 

One more unfortunate, 

Weary of breath, 
Eashly importunate, 

Gone to his death. 

In the economic sense, he is converted from a commodity for 
which there is no demand, into a worker, co-operating to make 
society wealthy, by the profit-maker, who has the initiative in 
industry, by being possessed of the capital to sustain him, the 
enterprise to obtain a job for him, and the courage to risk the loss 
of a capital, all of which he might convert into the means of his 
own enjoyment without employing any body. Under these cir- 



* McCullough's note to "Wealth of Nations," p. 159, says: " It is plain, therefore, that 
the prosperity of a country is to be measured by the rate of profit which her capital 
yields, or (for it is the same thing) by her capacity of employing capital and labor with 
advantage, and not by the actual amount of her capital or the number of her people. 
The capital of Holland is undoubtedly much larger, compared with her population, than 
that of the United States ; though as the latter is able to employ lier capital with far 
greater advantage than the former, every one is ready to admit that she is also by far the 
most prosperous. ' The progressive state ' is justly characterized by Dr. Smith as be- 
ing in reality the cheerful and hearty state to all the different orders of tlie society ; the 
stationary is dull, the declining melancholy. But as this progressive state is mainly a 
consequence of a comparatively high rate of profit, he ought in consistency to have 
maintained the doctrine that the rate of profit realized in different employments is the 
best standard by which to judge of their advantageousness." 

Mr. McCullough is here thinking of economic advantage, not of intellectual, moral, 
or social. 



PROFITS THE SOURCE OF WAGES. 169 

cumstances, is it fair to say with Dr. Smitli that this impersona- 
tion of destitution is the producer, and tliat the profit-maker and 
the landlord are the vampires that merely suck a part of his 
blood ? Is it not absolutely true that the profit-maker is the sole 
producer, and that i^ent is a first deduction from profit's share of 
the product ? Raw materials are a second deduction, implements 
and plant ai'e a third, wages of labor are a fourth, and so on ? 

Dr. Smith, however, saw clearly that, between the employers 
and workmen tliere goes on a system of profit-sharing, 
in which the true source of rise in wages is rise in profits. 
He says,* "It is not in the richest countries, but in the most 
thriving, or those ivhich are groiving rich the fastest, that the 
wages of labor are the highest. " Again, on p. 40, he says, ' ' The 
rise and fall in the profits of stock (capital) depend upon the 
same causes with the rise and fall in the wages of labor, the 
increasing or declining state of the wealth of society." Again, 
on p. 37, " The liberal reward of labor, therefore, as it is the effect 
of increasing wealth, so it is the cause of increasing population." 
P. 33, " The liberal reward of labor, as it is the necessary effect, 
so it is the natural symptom of increasing national wealth." 

The term used here, "rapid increase of national wealth," is 
identical in meaning with high rate of profit on capital. 

Eepeatedly, also, Dr. Smith explains that the high rate of profits 
induces a higher rate of wages through its effect to cause a com- 
petition among employers for the hire of workmen. 

Dr. Smitli had thus laid the ground- work for making the wages 
of labor depend upon the profits of capital, when he drops into 
the error expi'essed in the following (p. 41) : "In a thriving 
town, the people who have great stocks (capitals) to employ, 
frequently can not get the number of workmen they want, and 
therefore bid against one another, in order to get as many as they 
can, which raises the wages of labor and lowers the profits of 
stock. In the remote parts of the country there is frequently 
not stock sufficient to employ all the people, who therefore bid 
against one another in order to get employment, which lowers 
the wages of labor and raises the profits of stock.'' 

Capitalists do not bid against each other for more workmen 
merely because they have lai'ge amounts of unemployed capital 
on hand. They let their capital lie idle until there is such a 
margin between cost of i-aw materials and wages added on one 

* " Wealth of Nations," by Mr. McCuUough, p. 31. 



1 V ECONOMIC PHIL SOPHY. 

side, and the price they will get for the finished product, as 
presents a fair show of profit. This is illustrated in Chapter XV. 
of this work, in the cotton famine in Lancashire, in 1864, pro- 
duced by the cessation of supplies of American cotton. The raw 
cotton went up so suddenly as to be worth more per pound than the 
cotton goods, thus eliminating the possibility of profit in the 
manufacture. The mill-owners had abundance of capital, but 
they did not disperse it in wages after the margin for profit was 
gone. They shut down and waited until, by the consumption of 
the stocks of cotton goods on hand, the prices of the goods climbed 
up far enough above the price of cotton and wages to leave the 
margin of profit. The instant prices showed the margin the mills 
resumed. 

Nor is it always true that in remote parts of the country peo- 
ple bid against each other actively for employment, and so make 
wages low. They oftener withdraw from seeking employment 
at the hands of others, live upon nature, or within themselves, 
by those barbarous pursuits, hunting, fishing, and trapping, 
which consist only in appropriation, but engender independence. 
Capital is scarce and insecure in such places, and rates of interest 
are high because its investments are precarious, not because they 
are profitable, or rather none but the most profitable investments 
will overcome the deterrent effect of the precariousness of the 
venture. Wages may in like circumstances be high where they 
are paid at all, because the people are so accustomed to living 
without them that unless paid high wages they decline to work. 
While this may not be the universal rule, it is therefore the 
frequent fact that in remote localities the profits of capital are 
high, so far as capital consents to engage, and the wages of labor 
are high, so far as men consent to work, but both the men and 
the capital (what there is) are largely idle. 

By means of this partial error Dr. Smith was led into the gener- 
alization that "as wages rise profits fall," which was subse- 
quently elaborated by Ricardo. This is true in the same short- 
sense as it is true that when the clouds appear the sun ceases to 
shine. In fact, behind the clouds the sun is always shining, and 
the density of the clouds becomes the most powerful measure, as 
well as effect, of the intensity of the sun's shining. So it is rising 
profits alone that can ever he the potential cause of rising wages. 
Let that cause actually cease, and the effect would be like that of 
the extinguishment of the sun upon the clouds. They could 
never reappear. But so long as that cause is active, a temporar;y 



WHAT FIXES THE BATE. 171 

rise ill wages may seem, for a brief time, to extinguish profits, 
just as a temporaiy condensation of moisture may seem to extin- 
guisli the suii\s Hght. Tliat wliich seems to be extinguislied is in 
reahty the All-Powerful Cause of tlie existence of tliat wliich 
seems to extinguisli it. 

68. Equivalence of Exchange in the Wages Contract. — 
The political economist, lifting the veil fi-om society at work, 
brings to light a wholly involuntary system, not merely of co- 
operation but of social government, far more pervading in its in- 
fluence, and searching in its power, than the exterior State, whose 
framework exists in constitutions, and whose dignitaries fill the 
various oflBces of the visible commonwealth. This social plexus, 
this network of self-interest, this labyrinth of production and 
exchange, commands our service, not merely at occasional inter- 
vals or through official substitutes, but every moment and as to 
every person. In all our pursuit of wealth we obey it. In all business 
it reigns. Its capitals are where capital is. Its prophets are where 
profit is. We may adopt infinite resolutions to the effect that all 
men are equal, but, in the very act of adopting them, we appoint 
a ruler to preside at their adoption, and apply to capital to print 
them, which request it grants through the obedience it is able to 
exact from labor. 

Is this dominance economically necessary ? Is it a product of 
natural law? Political economy answers Yes; socialist critics 
answer No. Nine-tenths of that organization of industry, or asso- 
ciation of men in co-operative production, which distinguishes 
civilization from barbarism, and industry from anarchy, is ef- 
fected by the payment of wages. To discuss the cause of rates 
of wages, therefore, is to discuss the justice of the economic order 
of society. 

Wages are the compromise between the highest sum, which 
capitalists will pay rather than forego their chance of profit, and 
the lowest sum laborers will accept, rather than forego their chance 
of employment. If there is a margin between these two sums, if, 
for instance, the employer would pay $1 per day rather than forego 
his hope of profit from the emi^loyment, and the wage-worker 
would accept 60 qents a day rather than be out of work, then 
either will yield to the other, according to the degree in which he 
regards it necessary to him to secure the profit or the wage. All 
this, however, relates merely to the motives of the dicker. What 
is it that, getting down to the economic bedrock of the bargain, 
determines whether the employer will lose a profit unless he 



172 ECONOMIC PHILOSOPHY. 

employs a woi'kman, and, vice versa, whether the workman will 
lose a wage unless he works at the rate offered? Supposing both 
parties to judge of their own interests with accuracy, it will he the 
fact that the product, of their co-operation in industry, will sell for 
enough to yield the employer a return on his capital better than 
he could get elsewhere, after paying the laborer a wage better than 
he could get elsewhere. Here are two equations, each of which 
takes in a vast market of transactions. They are made between 
two classes of persons, between whom some things are equal and 
some things are unequal. Among the things in which they are 
equal is that the portion of the capital of the employer, which 
will hire a man, is of just as much value to the man whom it 
employs, as that man's work is to his employer. For where, of two 
co-operative agents, neither can act without the other, both are 
equal, and being equal in efficiency should have equal pay. 

Again, a dollar to a rich man is exactly equal to a dollar to a 
poor man, in the sense that if a rich man renders a service worth 
a dollar, his right to the dollar is as good, in ethics and equity, as 
that of a poor man. If, therefore, he brings to the poor man a 
co-operative agent, viz. capital,with which the poor man is enabled 
to earn a dollar which he otherwise could not, he renders an 
equal service to that which the poor man renders to him, if the 
poor man so uses this capital as to cause it to earn a dollar for the 
capitalist, through capital which would otherwise earn less. 

So if the two parties were merely fishermen, one of whom had 
furnished boat, lines, and bait, but could not fish himself, wliile 
the other fished, but had neither boat, lines, nor bait of his own, 
the aid of each being equally necessary as that of the other, it 
would be equitable that the fish product should be divided equally 
between them, no matter how many other meii the owner of the 
boat, lines, and bait might employ in the same way. Here we 
strike a principle of equity as between man and man. This is, that 
the amount of capital which employs a man's labor, and the 
amount of human labor which gives employment to this same 
amount of capital, should have an equal share of the joint product, 
if they are, as usually they must be, equally necessary to the 
joint result. If this is a sophism, I am not able to discern itg 
fallacy. 

Now, in every business, there is an aggregate capital, and an 
aggregate labor force. Suppose the capital to be $60,000 and the 
labor force 50 men. The unit of capital that employs each man is 
|1,200. For 50 men putting up $1,300 eacli could employ them- 



EQUAL SERVICE, EQUAL PAY. 173 

selves; virtually, therefore, the wage employment is a loan by the 
employer to each of his workmen of |1,200 with which to effect 
a work of production. If the mode of production is ill-advised, or 
the product is not in sufficient demand to pay a return of more 
than say $1,000 a year, while the wages^of the workmen, the i*ent, 
and other costs are $25,000 a year, then the employer will sink his 
entire capital in two years, while the workmen will get their wages. 
But the economic assumption is in accordance with the average 
course of industry, which I'equires that it should be socially in 
demand. Suppose it pays a return of fifty per cent, on the caijital, 
or a profit of $25,000 after paying wages. This will attract capi- 
tal from every quarter, until the rate of return is reduced to the 
average rate which capital yields in other similar enterprises. 
When it has reached this stable rate of gross return, what propor- 
tion of the gross return must go to capital and what to labor to 
make the transaction just? Should not that unit of capital which 
employs a man, and the man himself, share alike ? True, one man 
may own twenty units of capital and in that way get a return 
equal to that of twenty men. What matter, if the service he 
renders to each of the twenty exactly equals the service each ren- 
ders to him? His aggregate services to the twenty must be equal 
to the aggregate of the services of the twenty to him. Hence, if 
he furnishes the capital which employs twenty, or five thousand, 
he should receive an aggregate return equal to that of the whole 
number of persons to each of whom he reciprocates an equal ser- 
vice. In this way only can there be equality, and equity, in each 
of his exchanges of service for service. 

69. Instances of Equality of Division. — A case which was 
among.the first to suggest that there may be a natural tendency in 
the aggregate capital, to work on equal shares wuth the aggregate 
labor, employed in any branch of production, was that of the fifty- 
four railways which report annually to the railway commission- 
ers of Illinois. They embrace a cost, for construction and equip- 
ment, of $1,251,792,029.74, and have a par capital of $2,800,000,000. 
The number of persons who own shares, or hold loans, against 
them is not known, and is not perhaps capable of being made 
definitely known, as it is liable to hourly changes. The number 
of persons employed, from president down to switchmen is 156,007. 
The companies report that they pay for the use of their capital in 
all its forms, i.e., in 

Dividends and interest, $81,720,265.53 

And in wages and salaries, 81,936,170.81 



174 ECONOMIC PHILOSOPHY. 

Total gross income or joint earnings of 

labor and capital, $163,656,436.34 

Excess of labor's share over capital's sliare, . . $215,905.29 

Variation from equality in division, one-eighth of one per 
cent. 

Mr. Edward Bates Dorsey, in a paper read before the American 
Society of Civil Engineers, states that the total gross earnings of 
the railways of the United Kingdom are $355,311,350, of which the 
"operating expenses " absorb $186,842,810, and the total net earn- 
ings are $168,468,540, thus making the former absorb fifty- three 
per cent, and the latter forty-seven per cent. I have not the data 
by which to determine that the operating expenses are identical 
with wages and salaries, or whether as to some small part they 
inay not cover purchases of commodities which are really addi- 
tions to the fixed or circulating capital of the roads. If in opera- 
ting expenses are included any rents, or purchases for renewal of 
the fixed capital, as of engines, etc. , or payments for accidents 
and losses, then the true " wages and salaries " account would be 
diminished by so much. 

The unit of capital required to employ one man in the railway 
business in the United States is |8, 000. That sum, invested in rail- 
ways earns the same return as the mail it employs, within one- 
eighth of one per cent, per annum, so far as the railways reporting 
to the Illinois commissioners are concerned, and these are about 
one-fourth of all the railways in the country. This seems to indicate 
an involuntary tendency on the part of railway enterprises, employ- 
ing labor and capital at the cheapest competitive rates at which 
they can buy both in the market, to divide equally between labor 
and capital as wholes, paying the same sum to the unit of capital 
which renders the employment of one man possible, as they pay 
to that man whose employment renders the use of the unit of 
capital possible. On referring to the census, some materials are 
supplied for inferring the terms of division of the product between 
the aggregate labor aiid aggregate capitals there indicated. In doing 
so no occasion exists to use the figures, relating to capital, which 
numerous critics have successfully impeached. It makes no dif- 
ference, with reference to this calculation, whether the principal 
capital of an establishment includes bori'owed capital or not, or 
good will, or whether deduction is made for loans or debts, or, in 
short, whether the capital of any or all establishments is set down 
as $10 or $10,000,000. 



THE WAGE FUND. 175 

Simply take the value of the gross product of the various indus- 
tries, i.e. , what the product sells for in the market. The figures of 
the census, for this, have not been improved upon or attacked. 
From tliis, deduct the cost of raw materials used as per census, 
which also is as yet unimpeached. This difference between cost 
of raw materials, and value of finished product, is, of course, the 
increment of value which arises in the particular process of manu- 
facture under consideration. This is, in the long run, and making 
no consideration of losses, the fund which is to be divided be- 
tween capital and wages. In manufactures the wages are paid 
before the product could be sold. In railroading the product, 
transportation, is sold a month or so before the wages are paid, but 
in searching for the ratio of economic distribution of the joint 
product, between capital and labor, the time when the wages are 
paid is immaterial. Wages ai'e usually paid before the employer 
knows whether his product will reimburse him, and some- 
times it does not reimburse him. But this is true also of his 
rent, his plant, and every other element which undergoes 
economic distribution, and is therefore also immaterial in any 
effort to trace out the principles on which capital and labor usually 
divide, in order togivei'ise to existing rates of profit and wages. 

From the joint product above obtained, by deducting cost of raw 
materials from value of finished product, deduct still further the 
aggregate wages paid as given by the census. This quantity is un- 
impeached by the criticisms on the census, as it does not involve 
the average amount of wages paid per man, the ratio of the total 
amount to the time worked, or any disputed fact. The residue left 
by this last deduction would be the amount which capital would 
at least receive for distribution, or reimbursement, and for profits. 
It would be the sole fund from which capital would repair or ex- 
tend its plant, pay for losses in bad years or by bad debts, pay for 
wear and tear of plant and implements, rent, insurance, etc. The. 
net sum, remaining to the employer after covering all disburse- 
ments, would be profits. 

It must be borne in mind also that the labor bill, referred to in 
the census, is not to be mistaken for the entire labor bill involved 
in the product, which includes also the labor bills involved 
in the construction of plant and raw materials. It is the labor 
bill involved in the last process only of manufactui-e, viz., that of 
which the census professes to be an enumeration. 

By this method it appears that the total manufacturing indus- 
tries of the United States, in 1880, paid, as 



176 



ECONOMIC PHILOSOPHY. 



Wages to labor, 

Capital's share for disti-ibution, 
profits, .... 



includino- 



Excess of capital's share over labor's. 
Excess over half, 



^ 947,952,745 
1,023,801,837 

76,848,092 
38,424,046 



Variation from equality of division of the joint prodiict between 
capital and labor, four per cent, in favor of capital. As the rate at 
which capital extends its plant in manufactures, a service equally 
beneficial to labor as to capital, is not far from four per cent. 
per annum, the rate of effective division, or of actual beneficial 
equality, is about as perfect in manufactures as in railroading. 

In the chapter on labor other illustrations of this rule or coin- 
cidence appear. These instances are presented tentatively, and as 
showing a tendency, rather than as demonstrating a law which, in 
the present state of research, can be clearly defined.* Some pro- 

* Many facts bearing on this general point seem to confirm this ratio. 

Mr. Mallock (in " Property and Progress," p. 202) figures the gross income or joint 
earnings of the British people (including Ireland) at between £1,300,000,000 and £1,200,- 
000,000by the census of 1881. Of this sum the wages-class received £625,000,000 defi- 
nitely, leaving the aggregate receipts of the class having incomes exceeding £150 at 
about £577,000,000. A small share of these incomes may also in the economic sense be 
properly wages, which would require a deduction. But doubtless a much larger share 
of incomes were concealed or underrated. So a substantial equality is indicated 
throughout Great Britain between the earnings of capital on one side and labor on the 
other. It is indicative of equality in a rude but substantial way that in the United 
States the deposits in savings banks, which bere represent very closely the nninvested 
receipts of the aggregate wages-class, about equal the total deposits in National, State, 
and private banks, which are the uninvested receipts of the capital class. 

The apt diagrams used in this connection by Mr. Grunlund in setting forth the di- 
vision between the wages-fund and the capital-fund are marred only by Mr. Grunlund's 
deceptive term " surplus." Mr. Grunlund's allowance of 5 per cent, for wear and tear 
of capital is quite inadequate. With these qualifications he presents the 
system of division of the gross earnings of the manufacturing industries of the United 
. States in four successive census years as follows : 



1850. 



Wages for 


o 




957,000 




E 






•^ 


"hands." 


B 


13 



$437,000,000. 



1860. 



Wages for 
1,300,000 
"hands." 



Capital Fund, 
53 per cent. 



$805,000,003. 



WORKING ON SHARES. 



Ill 



cesses of exchange, for instance, may illustrate a far gx'eater power 
in capital than in labor, and one which will content itself with 
only the lion's share of the joint product. 



1870. 



1 
Wages for 

2,000,000 

"hands." 


Capital Fund, 
53 per cent. 



$1,310,000,000. 
1880. 



Wages for 


Capital Fund, 


2,739,000 


48 1-3 per cent. 


"hands." 





$1,834,000,000. 

It is made evident, by the facts collected concerning rents and interest in England, 
that the normal share of the gross produce of land, hired for Industrial purposes, which 
goes for rent, is one-fourth, or more frequently 21 per cent., and that the normal share 
of gross produce which goes for interest, when the whole capital is borrowed, is another 
fourth. As capital's share is two-fourths of the gross product, if we suppose the man- 
ufacturer hires his factory and pays rent, and hires his whole capital and pays interest, 
it is evident that a line directly through the so-called "surplus ''of Mr. Grunlund 
would devote half of it to rent and the other half to interest, and leave the enterpriser 
no " surplus " whatever. 

i?aeV "Contemporary Socialism," p. 399, says: "In Arthur Young's 'Political 
Arithmetic,' pablished in 1779 (Partii., pages 27, 31), heestimated thegross agricultural 
produce of England (exclusive of Wales) at £72,826,827, and the gross agricultural 
rental at £19,200,000, or 21 per cent., very nearly one-fourth of the produce. To come 
down nearer our own time, McCulloch estimated the gross agricultural produce of Eng- 
land and Wales in 1842-3 to have been £141,606,857, and the gross agricultural rental 
£37,795,905, or 26 per cent, of the produce. (" Statistical Account of the British Em- 



178 



ECONOMIC PHILOSOPHY. 



Adam Smith thought that agricultural rent was "seldom less 
than a fourth and frequently more than a third of the whole pro- 
duce" (Book ii. Ch.v.), but that "in the progress of improvement 

pire, SdEdn., p. 553.) The gross agricultural produce of the United Kingdom is now two 
hundred and seventy millions sterling, and the gross agricultural rental seventy millions. 
Mr. Mulhall, indeed, estimates it at only fifty-eight millions, but at seventy millions 
it would be as nearly as possible 26 per cent., curiously enough the same figure as 
in 1843 and in 1779, and almost the same as in 1689." These facts show that rent tends to 
take a fourth part of the gross product of such industries as are carried on on tho rented 
surface, or that the enterpriser v/ho hires all his plant pays out one-half the capital 
share for rent. 

As to rates of interest, it is easy, by comparison, to see that they usually range at one- 
half the profits earned by a capital invested by its owner in active business. Says 
Koscher : 

" At the end of the last century English farmers expected 10 per cent, profit on their 
capital, i. e., after paying for rent, wages, implements, and ravs^ materials." As current 
rates of interest were 5 per cent,, it would follow that if the farmer borrowed all his 
capital he would work at the halves with his usurer. The principle of division be- 
tween usurer and farmer is the same as between farmer and landlord. (A. Young, 
"View of the Agriculture of Suffolk," 179, 138,) Senior is of opinion that in Eng- 
land to-day (1830) industrial enterprises of £100,000 yield a profit of less than 10 
per cent, a year ; those of £40,000 at least ISJ^ per cent. ; those of from £10,000 to 
£20,000 15 per cent.; smaller one? 20 per cent., and even more. He mentions fruit huck- 
sters who earned over 20 per cent, a day, i.e., over 7,000 per cent, a year ("Outlines," 
203 seq.) In Manchester manufacturers, according to the same authority, turn over their 
capital twice a year at 5 per cent, (each turn), retail dealers, three times a year at Z% 
per cent. (Ibid. 143.) Torrens, "The Budget," (1844) 108, designates 7 per cent, as the 
minimum profit which would induce an English capitalist to engage in an enterprise of 
his own." (No'e to Am. Edn. of Roscher, Pol. Econ., vol. ii., p. 151). 

By profit in the last illustration I assume is meant the residue after paying rent, 
wages, cost of raw materials, and every other charge except that of interest on the 
capital invested. The profit of per cent, therefore would be the regular rate of interest, 
viz., 5 per cent., and the regular rate of commissions on managing small investments, 
viz. 2]/2 per cent. Each of the above cited rates of profit is twice the current rates of 
interest in transactions of similar dimensions. For it is well knowu that in the same 
circumstances in which profits on small capitals rise to 20, 30 or 40 per cent, interest on 
small loans rises to 10, 15 and 20 per cent. Hence interest ranges at a fourth of the 
gross proceeds of the industry on which the capital is loaned. The mode of distribution 
of the price of the gross product tends theoretically toward the following result : 



Raw Materials. 




Rent. V 


5J^ Interest. 

1 



EVANESCENCE OF TRUE PROFITS. Hd 

it increases iu proportion to the extent, but diminishes in propor- 
tion to the produce of land" (B. ii. Ch. iii.) thus leaving it at not 
more than one-fourth. 
Adam Smith saw this ratio of division between capital and 

But this is equivalent to saying that the distribution tends constantly to obliterate 
profits, to one who neither owns his plant nor his capital. This is true. It is exceed- 
ingly rarely that euch an one can continuously maintain himself in any business. It is 
almost an axiom that a profit-maker, to succeed as such, must own either his fixed 
capital, or his circulating capital, or both. Without either, he is a man of straw, an ad- 
venturer, aud is likely to travel out of one bankruptcy into another. Hence, in practice, 
profits proper, i. «. , considered apart from both rent of hind and remuneration to capi- 
tal, seem almost to narrow themselves down to a reward for getting the start of every 
body ; for making money in new or shrewd modes not known to either money-lenders 
generally or to landlords generally. Of course the profit-maker nas four funds out of 
which to save a profit if he can, viz.: in buying rawmaterials, in hiring labor, in hiring 
his plant, and in borrowing his capital. He has four more out of which to create a new 
gain, viz. : in discovering new channels of demand, in inventing new processes of sup- 
ply, in widening his market, and in cheapening his means of reaching it. But out of all 
these there is none which has the fi^sity which belongs to rates of wages, of rent, or of 
interest. Hence, it is singular that Adam Smith should have begun to reason concern- 
ing distribution by assuming an ordinary rate of profit on capital as a first fact. Profits, 
meaning a compensation for capital In excess of rates of interest, are so fluctuating as 
to be always extraordinary. For if profits perform the same function v.'hich a rudder 
of a ship performs, viz. : that of steering the course of industry, the rudder must be con- 
stantly changing, even when the course of the vessel is straight. Hence, of two com- 
mercial houses in business side by side, one may be making heavy profits, one may be 
losing heavily, and both may be mistaken as to their actual condition, or whence the 
profits or losses will come. 

It may seem that the proportion above claimed for the share of capital is widely in 
conflict with that arrived at by Mr. Edward Atkinson,* who expresses the opinion that 
" what portion " of the total product of a nation's industry "constitutes the average 
share of the capitalist at the present time can not be substantially proved. In a normal 
year under normal conditions," Mr. Atkinson is " of the profound conviction that not 
exceeding 10 per cent, can be set aside as either rent, interest, profit, or savings ; " and 
that nine-tenths constitutes the share of the laborer, which by subdivision becomes ex- 
pressed in personal wages." In saying that " not exceeding 10 per cent, can be set 
aside as either rent, interest, profit, or savings " Mr. Atkinson first awards 10 per cent, 
to each of these, making 40 par cent, for all, but by assuming that nine-tenths of the 
product would be left for wages he reconstructs his 10 per cent, so as to make it cover 
all instead of each of the four. This may be a slip of the pen, but iu view of the actual 
facts it seems much like a fatal leap in the thought. Among fully one-half the popu- 
lation of the United States, and over three-fourths of the area, say in all parts south of 
Cincinnati and west of Toledo, 10 per cent, is the current and average rate of interest 
alone on all loans except the largest of those made in cities. Most real estate rented 
for productive purposes draws from 8 to 10 per cent, rent, even in Eastern cities, and 
frequently 20 per cent. Most corporate shares are rated at the principal sum on 
which they will pay 20 per cent, instead of 10, thus showing that capital values itself 
for investment at 20 per cent., not 10. Thus a corporation having a par capital of $200.- 
000 and earning $200,000 a year will sell its shares in the aggregate at about $1,000,000, 
or the sum on which it pays 20 per cent. Twenty per cent., therefore, is capital's own 
valuation on itself when invested productively. Again, the ratio of the annual prod- 
* Essay, " What Makes the Rate of Wages," p. 27. 



180 ECONOMIC PHILOSOPHY. 

labor and states it very comprehensively. (Book ii. Ch. iii.) 
He says : ' ' That part, of the annual produce of the land and labor 
of any country, which replaces a capital, never is immediately 
employed to maintain any but productive hands. It pays the 
wages of productive labor only. " 

" When it (the annual produce) first comes either from the 
ground or from the hands of the productive laborers it naturally 
divides itself into two parts. One of them, and frequently the 
largest, is in the first place destined for replacing a capital (^. e., 
re-imbursing for wages paid) or for renewing the provisions, 
materials, and finished work, which had been withdrawn from a 
capital ; the other for constituting a revenue, either to the owner 
of this capital, as the profit of his stock (or interest), or to some 
other person as the rent of his land. Of the produce of a great 
manufactory, in the same manner, one part, and that alwaj'^s the 
largest, replaces the capital of the undertaker of the work ; the 
other pays his profit, and thus constitutes a revenue to the owner 
of this capital. '' 

Dr. Smith also describes interest as ruling at one-half the cur- 

uct of the nation's industry to its principal capital is 25 per cent. , showing a tendency 
to earn that amount through the joint efforts of capital and labor. Again, Mulhall and 
other statisticians estimate the annual national savings alone, or the increase of wealth 
that goes over to another year, at upwards of $800,000,000, or at least 12 per cent. Sup- 
pose A to desire a property worth $20,000 for manufacturing purposes. As rents go 
he would begin by paying $2,000 for it as rent. If he should form a stock company the 
capitalized value of the shares in the money market would be that sum on which his 
earnings would pay from 15 to 20 per cent, dividends. How many times would he turn 
his entire capital over in a year? In a daily newspaper at least three times. In other 
branches of manufactures nearly as often. The total value of the establishment will 
be the principal on which the profits of these three turnings over will be 20 per cent. 
The average of business establishments apply nearly 10 per cent, per annum, sooner or 
later, to the extension of their business or to private residences of their owners. Either 
is an embodiment of profit. Contemplate the enormous manufacture of private resi- 
dences constantly going on as a means of embodying the profits of business. All this 
does not come out of a 10 per cent, on the money invested. 

Mr. Atkinson seems to have in mind, moreover, the net profit of the capitalist ap- 
propriable to personal and family expenditure, after paying cost of erection and annual 
wear and tear of plant and implements, insurance, losses of bad years, and the like. 
The distributive share which capital must disburse in other ways than in payment of 
wages and raw materials is another matter. The latter forms the object of my pur- 
suit. 

It is to be regretted that neither Smith, Ricardo, Mill, Carey, Cairnes, MacLeod, nor 
any other writer, so far as I have met with their writings, attempts to fix the ratio of 
the distributive share of capital by an appeal to data sufficiently extensive to be called 
scientific. Hence any attempt to reduce the hitherto unrestrained course of assumption 
to a basis of fact may give rise to the charge of empiricism . This we must endure, so 
that the course of the combat may in time be shifted from the empirical to the 
Hcientific basis. 



LABOR BECOMING CAPITAL. 181 

rent rates of profit. (Book i. Cli. x.) He had thus in mind, 
exactly the division outlined in this chapter, viz. , one-half to re- 
imburse capital (wliich he defines as all going to pay wages of pro- 
ductive labor) and the other half to interest (one-fourth) and rent 
(one-fourth). 

Three facts in our American rates of wages tend to confirm this 
view. These are : 

1. Tlie standard of wages in agriculture goes far toward 
fixing the standai'd of wages in manufactures. In agriculture 
the extent to which the farm labor contracts to work for half the 
product, as against the land and the capital jointly, both of which 
get the other half, shows that in farming the real rate of wages 
is adjusted upon the principle of giving half the product to labor 
and half to cajjital and land jointly. A presumj)tion would arise 
that the same must be true in manufactures, mining, railroading, 
and merchandising, simply as an effect of the natural tendency 
toward an equation of rates of wages (other things being equal) 
in all occupations. 

2. The practice, in manufactures, of arranging the wages of 
workmen on a sliding scale, whereby the workman's compensa- 
tion is proportionate to the price of the products, prevails iii cer- 
tain branches of the iron manufacture, and indicates, so far as it 
goes, that wages in manufactures generally are proportionate to 
product. 

3. When colored laborers in the Southern States were the sub- 
jects of property, the price which attached to the laborer as an ob- 
ject of iDurchase would naturally be adjusted according to the 
amount of cajpital on whicli his earnings in excess of the cost of sub- 
sisting him would pay a better profit than would be obtained on the 
same capital in other forms of industry, other things being equal. 

Agricultural laborers brought from $800 to $1,200. In free 
agricultural labor at the same period the amount of capital re- 
quired to work in partnex'ship with a laborer, i.e., the amount of 
capital which would, when invested in farming, land, and imple- 
ments draw the same return which the laborer would draw, was 
from $800 to $1,200. Of course the slave became himself capital, to 
the amount of the capital he exempted his owner from the neces- 
sity of acquiring, in order to use his labor. The free laborer works 
in partnership with this same equivalent of capital, invested in 
land and implements and takes half the product. 

Doubtless in a shi-ewdly conducted commei^cial business like 
that of the late A. T. Stewart, the share of capital, and even per- 



182 ECONOMIC PHILOSOPHY. 

haps the annual net profits of the proprietor, might amount to 
more than the clerk hire and labor bills. But I have heard it 
remarked, by practical merchants, that what a clerk or salesman 
makes in his last years of clerking and the profits of his first years 
of trade, are so nearly on a level as seldom to result in any sud- 
den change in his condition. 

70. Productive Industry Is a Form of Social Govern- 
ment. — Though I have thus far treated the wages conti^act as if 
labor were the thing sold by the woi^ker to his employer, it will 
help to clear away many deceptions, which have misled some to 
their injury, if I point out that, as a rule, the essence of the wage 
contract is not in the sale of labor but of obedience, sovereignty, 
or will, so as to produce not so much force, as flow or harmony of 
action, which can only come from the subordination of many 
wills to a single will. A man may put any amount of time and 
vigorous toil into his work, but if it is done disobediently to his 
employer's will, he is entitled to no pay legally or morally. It is 
universally understood that what the employer buys, is not so 
much, or so specifically, muscular efi'ort, as the right to direct the 
effort, whatever its kind, whether it be muscular or nervous, bod- 
ily or mental. The porter who stands at the door of a residence, 
hotel, or restaurant, and opens the door, perhajDS electrically by 
touching a spring, whenever he sees a guest about to enter, can not 
be said to laljor, for no more physical effort is required to do this 
than to do nothing. But he earns his wages and is a productive 
laborer. Why ? Because his employer's interests prosper better, or 
his employer's pleasure is subserved more truly, by impressing 
every person who enters with a sense of politeness pervading the 
establishment than if the visitor is requii^ed to ring and wait, or is 
left to open the door himself. In this case, therefore, the wages 
are earned, not by labor, but by that subserviency, which shall 
stand for, and represent, the intended politeness, or taste, or style, 
or dignity of the master. 

Subordination, therefore, is the one thing bought and paid for in 
the wages contract. "They also serve who only stand and wait." 
On the other hand, insubordination destroj^s utterly the working 
value of the most capable, skillful, or experienced worker. It is, in 
the wages contracts, the chief and most unpardonable of all 
viciousness. An insubordinate, or self -inspired worker, can not be 
depended on, in any capacity which requires organization or co-op- 
eration with others on a large scale, and must either become his 
own employer or must degenei^ate into pauperism. 



OBEDIENCE IN LABOR. 183 

Uninstructed persons, of insubordinate or truculent tempers, 
often pride themselves upon what they style their independence, 
meaning thereby their readiness to quarrel or argue with employ- 
ers, and thereby to bring on themselves discharge from employ- 
ment. 

They should understand that there is no baseness in the sort of 
obedience, which is called for and paid for as the essence of the 
wages contract, for the reason that only in this way can industry 
be steered in the direction of demand, which is the function which 
employers subserve in industry. 

The employer's business is to seek and yield to the public de- 
mand. His phrase to his workmen is, "I must please the public ; 
you must please me." It is through the subserviency of the em- 
ployer to the public, followed up by the subserviency of each 
employe to his or her own employer, that the entire force of 
employes may be held to the work of satisfying a public want. 
This is organization in industry. It is the only practicable way 
in which men and women ordinarily can render those services to 
their fellow-men sufficient to call for that return service at the 
hands of others known as " a comfortable living." 

For, as a rule, each person in business gains his living by the 
service he renders to strangers in the economic sense, i. e., to 
persons to whom he is under no obligations, and very likely does 
not know, and who, in turn, do not know him. The engineer 
on a railway really serves the passengers and the owners of the 
freight which are entrusted to be drawn by his engine. Both 
these classes are strangers to him. The medium of enabling him 
to serve these strangers is his wage contract with the railroad 
company, which, in this case, is the middleman effecting an ex- 
change of the engineer's time and that of others, working to- 
gether in the use of the stockholders' capital, i. e. , the rolling 
stock, in order to sell, to the freight owners and passengers, a joint 
product of capital and labor, viz., transportation. But on 
analysis it is not really capital and labor that effect the trans- 
portation, but it is command and obedience. For, no matter how 
much capital is put up, if commands are not obeyed, the railway 
is converted instantly from a means of transportation into a mere 
means of wholesale slaughter. The labor of transportation in 
this case, i.e., the physical force which draws the train, is not put 
forth by the engineer but wholly by his engine. The supervision 
of the engineer is directed wholly to making the engine obey the 
time-table. This may be called labor on his part ; but it may be 



184 ECONOMIC PHIL080PHT. 

merely a labor of watching — the end of which is obedience, pure 
and simple, but the alternative of which is destruction, sudden 
and terrific. The organization of labor in society, therefore, is 
effected by means of a system of subserviency and obedience, 
whereby every industrial act, every sale of a service or a com- 
modity, and every performance of a service, or a contract, is part 
in a chain of causation of which the supply of all is the ultimate 
effect, and the demand of all is the primary moving power and 
stimulus. The steering and piloting is all done to make profits. 
The manual and methodized labor is all done to earn wages. But 
these terms are, in the final analysis, interchangeable. Wages 
are always the profits a man wins, by investing his time and sell- 
ing his will, judgment, and obedience, in the manner which he 
draws his wages for, rather than any other. And profits are the 
wages a man gets for risking his means in a given investment, 
and abstaining from enjoying the principal while it is so invested. 
Hence there is an ultimate sense in which wages are profits and 
profits are wages. Just as we have seen in Chapter I. , there is an 
ultimate sense in which capital performs labor, or labor is capital. 
71. Do the Indispensable Means of Labor Earn a 
Share of the Product ? — While Karl Marx nowhere presents 
any facts showing what the ratio of the wages share to the 
capital share really is, he constantly assumes that it is equal.* 
But by assximing also that the wage laborer is the sole producer 
of value, that the capitalist's contribution of the means of work 
is in no way necessary, and should not be permitted to reap any 
return, since these means are themselves the result of previous 
robbery and not of saving ; and that the wages paid are in all 
cases only the cost of sustenance of the laborer, with just enough 
added to enable him to propagate his class without increase or 
diminution ; that mere exchanges of commodities do not create 
values, hence that the functions of the capitalist, enterpriser, and 
trader are all needless, Karl Marx is able, through the necro- 
mancy of bald assumption, to convert a division between two 
equal partners, in the ratio in which they contribute to production, 
into a spoliation or "exploitation " of labor,! by capital, to the ex- 

*" Kapital," vol. i., page 375. 
+ The choice of the word "exploitation" by the socialists is particularly happy, since 
it is in fact tiiithful when accurately understood. Exploitation does not mean " spoli- 
ation," but simply creating or causing exploits or achievements where otherwise there 
would be inaction. It implies that capital energizes labor, but this implication is 
ignored. Its perversion into a term signifying robbery is part of the general system of 
" exploitation " of economic terms carried on by socialist writers. 



ALL CAPITAL A LOAN TO LABOR. 185 

tent of 100 per cent, on what labor produces. He constantly styles 
the cost of the sustenance of the laborer his natural wages, under 
the iron law of Ricardo and Torrens, and assumes that he gets 
no more, ignoring the fact that most capitalists start in life as 
wage laborers, and begin their capitals through the savings from 
their wages. All the value commodities have, at any time, over the 
cost of sustenance of the labor which produces them, he denominates 
"surplus value," exploitation, or robbery. Thus that form of 
economic "criticism " which begins by assuming that lack of the 
means to woi*k with, which is what we call labor-power, creates 
all values, speedily ends in that form of war on society and in- 
dustry known as Anarchism or Thuggism. 

The first truth to be embraced by one who would really com- 
prehend the plexus, or interlocking of labor with capital, in 
the present organization of industry, is that all reproductive 
capital — the machinery with which the profit-maker works, is in 
use by the workers themselves, and is their means of earning 
wages. 

In his " Chapters on Socialism," Mr. Mill, who was himself in 
many senses an avowed socialist, says : 

" Another point on which there is much misapprehension on the part of soc ialists, as 
well as of trades unionists and other partisans of labor against capital, relates to the 
proportion in which the produce of the country is really shared, and the amount of 
what is actually diverted from those who produce it — " 

Mr. Mill here falls into the very socialistic error which he is 

attempting to rebuke, by assuming that all that wage laborers do 

not get is so much ' ' diverted f I'om those who produce it " — 

— " to enrich other persons. When, for instance, a capitalist invests £30,000 in his 
business, and draws from it an income of, suppose, £3,000 a year, the common impres- 
sion is, as if he were the beneficial owner both of the £20,000 and of the £2,000, while 
the laborers own nothing but their wages. The truth, however, is that he ouly obtains 
the £2,000, on the conaiiion of applying no part of the £30,000. to his own use." 

And of loaning its use in some form to labor, i. e., to relative 
destitution — 

He has the legal control over it, and might squander it if he chose ; but if he did he 
would not have the £3,000 a year also. For all personal purposes, they have the cap- 
ital, and he has the profits, which it only yields to him on condition that the capital 
itself is employed in satisfying, not his own wants, but those of laborers. 

A truer statement would be that the capitalist has the power to 
steer industry in the direction of what lie deems to be the profit, 
which is always that of the effective social demand. For this 
power he takes the profits, and incurs the losses, incident to the 
employment of reproductive capital. Operative workers have 



186 ECONOMIC PHILOSOPHT. 

the loan of his capital for their use, as the condition, or means, 
or partnership by aid of which they can produce, and without 
the aid of which they would loaf in idleness. And the customers 
of the business or purchasers of the product of their joint labors, 
who are nearly equivalent to society at large, have its services, as 
they do those of labor, by paying for its product. 

72. Does the Risk of Loss Give Valid Title to the 
Profit ? — Many socialists concede that, in the present organiza- 
tion of labor, the rule of the profit-maker over the wages-earner 
is temporarily just, so long as it is made necessary, by the lack 
of ownership, by the wage-earner, of the job, implements, means 
of subsistence and capital, from which to make up to the wage- 
earners and to others, the ultimate loss of wealth which will 
result to society if industry is steered toward the production of 
unprofitable products. 

But they desire us to believe that it is not intrinsically and 
economically just, and will not be perpetual. In short, they 
hold, with Mr. Mill, that ' ' it rests upon the arbitrary institutions 
and customs of men, and not on irreversible economic law." 

If it be possible for society to evolve into such a condition that 
all men will own their own jobs, implements, means of subsis- 
tence, and capital, from which to make up losses, the social 
problem would have been solved by the elimination of the wages 
class, and by the fact that none but capitalists would remain. 
But the prediction of such a state of things falls within the 
domain of prophecy, presumption, or quackery — of the first if 
true, of the second if undemonstrable, and of the third if false. 
Economists can only say that in the kind of world we live in, 
the reign of the enterprisers and profit-makers over the wage 
earners must continue, so long as any class of men need to work 
in order to live, and have not the means to work with. 

Henry George declares that creation alone gives title. We ac- 
cept this definition for the profit-maker's title to his profits. When 
ten thousand men lie idle, who would gladly do their share 
toward building a railway, if some profit-maker will but come 
and incur the risk of loss implied in the furnishing the means 
with which to build the road, but who are powerless and starving 
because he does not come, can it be said that it is this inertia of 
destitution that alone builds the road ? The profit-maker comes. 
Instantly they spring to their feet and commence building. Why? 
Because they have sold themselves, their muscles and their time, 
to him for a day. What for ? So that he might out of their 



BUYING LABOR-TIME. 187 

idleness create labor — out of their incoherence create co-operation 
^-out of their babel create unity — out of their destitution and 
incapacity create wealth. He does create all these, buys them 
by buying the laborer's time, and the right to command his 
obedient will. Having created them, shall he not own what he 
has created ? If so, then, for the purposes of the day's work, he 
is owner, and the laborer is implement. He is Mind, Force, 
Energy, and the laborer is cart-horse and harrow, mere clay in 
the hands of the potter. How, then, shall the clay say to the 
potter, " I am the producer?" The universal conscience of man, 
and even the very definitions laid down by socialists, alike agree 
that when the profit-maker, by incurring a risk of loss, where 
others will not, leads forward the industrial host into enterprises 
in which others dare not, and so creates labor itself where others 
Avould let it rust, and the result proves that he has met and satis- 
fied a social demand which others did not see, he shall have a 
valid title to the profit because he created it, as well as a valid 
command over the labor which he evokes, because he creates that 
also. 

The moral and legal right of the profit-maker is to rule industry, 
subject to its power to rule him. By this we mean it is his right 
to select the kind of work on which he shall enter or continue 
solely with reference to whether he sees a profit in. it, and to 
refuse or stop when he sees no profit, to prescribe the hours on 
which he will consent to run his industry, subject, of course, to 
such opposing foi'ces as society may bring to bear. It is his right 
to get all the effective service out of his working force which he 
is willing to buy and pay for, as it will naturally devolve on his 
working force to get all the wages out of him which they can 
make the services rendered bear. If he exploits their labor, so do 
they exploit his capital. But he becomes one power, and their 
aggregate becomes another, in an equal contest. Each unit of 
capital, or sum necessaiy to employ a man, acquires an equality 
in exchange as against that man. Its indispensability in produc- 
tion is worth as much as his. Its capacity to earn equals his. Its 
capacity to bless or curse mankind, to do good or harm, equals his, 
because, if he declines to labor on its terms, it can usually find one 
who will. What the laborer produces, therefore, by laboi'ing, is 
not the commodity which figures as the joint pi'oduct of labor 
and capital. A laborer is the sole producer, only, of a diversion 
to himself of wages which would otherwise go to another laborer. 
In himself alone, he is exactly as productive as any other commod- 



188 ECONOMIC PHILOSOPHY. 

ity, for that, by its sale, produces a diversion of a price which 
would otherwise have gone for another commodity ; so does he 
sell a commodity and another takes its place. Discharge a laborer 
and another takes his place. Hence Karl Marx's phrase, surplus 
value — meaning the value a laborer produces above the wages he 
receives — defines a modicum of moonshine. He produces his 
wages, or rather their diversion from another to himself — no 
more and no less. All that remains above his wages is the share 
which accrues to the profit-maker, who is the sole producer of the 
commodity, process, or result which commands both the wages 
and the profit. 

If a profit-maker produces that which society does not want, he 
is punished for it by loss of capital ; if he continues in his course, 
by bankruptcy. He is as severely dominated by society as his 
workmen are by him. That which he produces without adequate 
demand, he must sell for as much less than it cost him to produce 
it, as society has less need of it than of other things which might 
have been produced by the same effort. 

Having no power to compel society to pay him more for his 
product than it pleases, as society pleases to pay him less than its 
cost, the difference is his loss, penalty, and punishment for igno- 
rantly assuming to lead social industry into any other form of 
work, or to any greater cost for a particular form of work, than 
that tor which there was most effective social demand. It is 
upon condition of sustaining all these losses, that the profit-maker 
enjoys his counter-privilege, of collecting, as profits, the excess of 
price which demand puts upon his product, over its cost of produc- 
tion. " Nothing ventured, nothing had." It is the courage to 
risk this loss that constitutes enterprise and creates all industry. 
Hence the title of profit-maker rests on his utility as a creator, 
and is valid. 

73. Loss as Well as Profit an Economic Force. — The fear 
of loss brings often as much suffering to the successful as the dread 
of want brings to the poor. All men have a nearly equal capacity 
for painful and pleasurable emotion, and the tendencies to emo- 
tion of either kind are a nearly constant quantity. The portion 
ot a rich man's wealth which he deems secure, and the portion 
of a poor man's living which becomes habit, fall out of the emo- 
tional range of their natures, and cease to affoi'd pleasure or pain. 
These spring from the periphery of uncertainty which surrounds 
the habitual, and in this sphere the sweets of pleasure and the pangs 
of pain live on, as in a tree the sap circulates only between tlie 



LOSSES. 189 

growing roots below and the growing leaves above, leaving the 
interior channels of fixed habit to decay and hollow death. Man 
living at his points of growth only, which are his points of utility 
to himself and his fellows, finds a nearly equal chance to keep 
green and fresh those emotions which are the ultimate and final 
wealth of his nature, whether he be poor or rich. 

All values evanesce rapidly. All wealth is constantly losing 
its value. Bankrupts discovered, settled, and cleared America. 
But the bankruptcy came after the service. They that founded 
its cities, built its railways, inaugurated its inventions, also be- 
came bankrupt. Columbus found in Spain a prison. Hudson 
met in the northern seas a dagger. The wife and children of 
Goodyear were buried as pau^Ders by charity. Even Prof. Morse 
was lifted out of destitution by private friendship. 

Arkwright, too, by his talent for organization principally, like 
Siemens and Edison, attained to princely wealth, while Har- 
greaves, a greater inventive genius than Arkwright, from a tech- 
nical point of view, had to bear all the hardships of extreme pov- 
erty.* 

An experienced Frenchman, Godard, estimates that in France, 
of one hundred industrial enterprises attempted or begun, twenty 
fail altogether before they have so much as taken root ; that from 
fifty to sixty vegetate for a time in continual danger of failing 
altogether, and that at farthest ten succeed well, but scarcely with 
an enduring success, (Enquete Commerciale de 1834, ii. 233.) 

Pioneers of enterprises in which fortunes ultimately arise often 
die beggars. Losses are seldom summarized or collected. They 
represent only the vacancies left by explosions, the nothing which 
takes the place of something. We all hear of Cyrus W. Field, 
for he laid the cable which was rescued from oblivion by profit. 
We do not hear of those who sought to perform the same service 
by a telegx'aph line, through Alaska and Russia, from New York 
to London. The success of the cable was their failure. 

The reasons why the mass of mankind are wage-workers is not 
that they have always lacked the means to become profit-makers. 
It is that they once possessed them, i^layed at the game, and lost. 
For when they lose they die, or fall back into the ranks of wage- 
workers. Very few men work for wages that do not at some 
time attain as lai'ge capitals as those with which Vandei-bilt began 
to row his passengers from Staten Island to New York, or with 

* Note to Roscher, Am. Edn. p. 140, 



190 ECONOMIC PHILOSOPHT. 

which Peter Coopei' started his cofFee-stand on the sidewalk, or 
with which Bennett began the Herald. 

To-day the deposits, nearly all of which belong to wage-work- 
ers, in the savings banks of the United States represent a capital 
of about $1,200,000,000, which is a sum equal to the entire aggre- 
gate deposits of the business men in the State and National banks 
combined. The average deposit to each person is |360. Every 
such person is a wage- worker from preference, because he fears 
the risks of business. 

I am aware that the wage- worker points to the lock-outs, strikes, 
commercial crises, times when he is out of work, or works for an 
insolvent employer who does not pay him, and insists that he, too, 
shares in the losses of industry due to its being turned into chan- 
nels where its product is not demanded. In the cases of lock-outs 
and strikes, the wage-worker is paid while he works, but his work 
stops. There is no loss of pay for woi'k actually performed, con- 
sequently no wealth passes out of him to compensate society for a 
mal-employment of labor. On the contrary, he may have grown 
richer by that very mal-employment of labor by which society 
would have grown poorer, but for the fact that the whole loss to 
society is paid for out of his employer's capital. 

In commercial crises labor and capital botli stand still. Labor 
contributes no value which is capable of compensating society for 
a loss. But the capitalist who has invested $50,000,000 in build- 
ing a railroad worth $5,000,000 has sustained a net loss of $45,000,- 
000, which, if society in the aggregate were the capitalist, would 
have to be borne by society at large. And if thousands of small 
capitalists were the owners, it would send ruin into as many fam- 
ilies. 

In 1883 to 1885 railway shares in the United States shrank in 
value by one-third, without, it is believed, causing poverty to be 
felt in a single household or the discharge from employment of a 
single workman. 

The only case in which the wages- worker makes a loss which 
makes him a sharer in the punishinent due to an unprofitable 
guidance of industry is when he works for an employer in creat- 
ing reproductive wealth and his employer so fails as not to pay 
him. In this case the wages- worker "adventures," or risks, his 
labor intentionally on his employer's responsibility onlj^, but vir- 
tually on the success of the enterprise. Nearly everywhere he is 
given a lien which guards against his loss if the improvement 
ever attains value. To make the adventure fair, his wages ought 



TIME IN PROFITS. 191 

to be enough higlier than he could earn elsewhere to cover this 
risk. 

As a rule, and in the large, the profit-maker relieves society of 
all pecuniary loss by the unprofitable misdirection of labor in the 
production of that for which there is less than the highest current 
demand. He exempts society from all waste of labor by paying 
the penalty of such waste himself. 

. Who can estimate the value of the vast saving to society which 
accrues, and the vastly more I'apid growth of wealth which re- 
sults, and the prodigiously greater amount of mental service ren- 
dered by each part of society to every other, under a system which, 
by shoving over all uneconomic and unprofitable effort on those 
who cause it, resolutely holds the great mass of workers to effort 
that may be perhaps distasteful and uncongenial to nearly every 
person engaged in it, but which, by the fact that it pays a profit, 
is inexorably proved to be the most demanded of any service that 
could be rendered. The instinct which draws society toward 
profit is analogous to the attraction in nature which draws jjlants 
toward light. 

74. The Rate of Profit.— Prof. H. D. MacLeod, with great 
force and acuteness, points out* that the rate of profit varies, 
directly, as the excess of the price of the product above the cost 
of production, and inversely, as the time in which the profit is 
made. Hence, if the capital advanced be £100 and the profit £20, 
the rate of profit depends on the time within which it is made. If 
it be made in a year, the rate of profit is 20 per cent, per annum ; 
if in a month, it is 240 per cent, per annum ; if in a week, it is 
1,040 per cent, per annum ; if in a day, it is 7300 per cent, per 
annum. Thus the same profit may, if made in a different length of 
time, be a very different rate of profit. The profit is, in all cases, 
the difference between cost of production and price of product. 
The rate of profit is, in all cases, the percentage of the return 
earned, to the capital invested, within a given time. The rate of 
profit, therefore, as between different industries, depends largely 
on the proportion of the capital which can be brought into active 
use, or, as the phrase is, turned over, and the time required to 
turn it over, as well as on the percentage of the gross return to 
the principal. In American farming at least two-thirds of the 
capital is in the land, which is not turned over in the economic 
sense except as it rises or falls in value, and this rise or fall is not 

* " Principles of Econ. Phil.," vol. ii., p. 41. 



192 ECONOMIC PHILOSOPHY. 

efPectively realized unless it is sold. The farming implements, 
though capital, make no separate profit on their own turn over, 
as they decline in value each year. The live stock and crops, 
and the cut of grass and forest, are the yearly portion of capital 
turned over, and these usually only from once to twice a year. 
Most manufacturing concerns, however, turn out a product from 
once to five times their capital, or virtually turn over their capi- 
tal as many times each year, and most large banks loan from four 
to six times their capital. 

It may he asked, if the rate of profit is so much greater in hank- 
ing and manufacturing than in farming,* why does not farming 
capital go into banking and manufacturing until the rate is 
equalized ? The answer is that the risks of farming, where the 
farmer owns his farm, are reduced to the minimum, and are lower 
probably than in any other occupation. This at least is true of 
farming in the Eastern States. Where, however, as in the West- 
ern States, farming is marked by an increased addiction to a single 
crop, produced by an application of a large capital to a very large 
area of land, the risks increase, losses are frequent, bankruptcy 
almost as frequently overtakes the farmer as the merchant, and 
as great fortunes and as high a rate of profit is made in farming 
as in any other occupation. 

Adam Smithf supposed that there is an "ordinary rate of 
pi'ofit " on capital sufficient to meet the losses to wdiich it is ex- 
posed, and leave a certain other "ordinary rate of clear pi'oflt," 
or business would not be carried on. This was because he began 
with labor as the eSicient agent, instead of with enterprise — with 
matter instead of with mind. In fact, there is no ordinary rate 
of pi'ofits, and no two investments of capital, in any country, that 
agree either in the volume or the rate of their profits. To allege 



* MacLeod (Vol . ii , p. 61) regards tlie'oppDsite view, as held by Adam Smith ("Wealth 
of Nations, "Bk. ii., Ch. v.) as most extraordinary, and contrary to the plainest facts of 
history. Dr. Smith says : " No equal capital puts iu motion a greater quantity of pro- 
ductive labor than tliat of the farmer ... no equal quantity of productive labor 
employed in manufactures-can ever occasion so great a reproduction. In them nature 
does nothing, man does all ; and the reproduction must always be in proportion to the. 
strength of the agents that occasion it. The capital employed in agriculture, therefore, 
not only puts in motion a greater quantity of productive labor than an eqnaUquantity 
employed in manufactures, but in proportion, too, to the quantity of productive labor 
which it employsdttadds a much'greater value to the annual produce of the land and 
labor of the country, to the real wealth and revenue of its inhabitants. Of all the waya 
in which a capital can be employed, it is by far the most advantageous to society.'" 

t " Wealth of Nations," by McCuVloch, p. 41. 



HALF-PROFITS MAKE INTEREST. 193 

such an agreement would impeach their balance sheet as effectu- 
ally as an alleged Chinese census is impeached when two large 
provinces are given exactly the same area and the same popula- 
tion. What ordinarily takes place is not that those who lose 
their capitals have them made up to them by succeeding profits, 
but that they are eliminated as profit-makers and fall back into 
the ranks of wage-workers. They go at something else. There 
is an ordinary transfer of the capitals of losers into the hands of 
winners, and in this way capital is steered out of losing invest- 
ments into profitable investments. 

Adam Smith was nearer the truth when he estimated that half 
the average rate of profit Avould be the ordinary rate of interest. ='' 
For the principle uj)on which we have supposed the division 
to be made between the profit-maker and the wages- worker would 
also apply between the borrower of capital and the lender. A. 
man will borrow capital to work with when the profit he can 
make by borrowing it, or the residue he will have left after pay- 
ing interest on it, amounts to a better compensation, for his care 
and risk in superintending the work he will set on foot with it, 
than any other use he can make of his time and risk at the same 
cost. 

If his own capital enable him to employ ten men, but by bor- 
rowing as much more he can employ thirty men, the increased 
capital increasing the efficiency or the losses of his establishment 
by more than its own quantity, he may obtain on the labor of the 
thirty men a gross sum out of the product twice as large as the 
wages of the thirty men, and he may only get a product half as 
large as the wages he pays. If he and the lender of the money 
meet at the point where each is equaljy indispensable to the other, 
he furnishing the lender with an investment he lacks, and the 
lender furnishing him with a profit he lacks, to make the exchange 
equal he should divide equally. 

Profits are so much more unstable than interest, and losses to 
the profit-maker, are so much more frequent than to the money 
lender, that any comparison between the two is necessarily one 
of instability with stability. 

The same consideration applies to any comparison of rates of 
pi'ofit with rates of rent on land. 

Adam Smith, starting with the proposition that rates of profit 
on capital would conform to a certain standard, assumed that 

*Booki., Ch. ix.. McCiillough's Edn., p. 41. 



194 EGONOMIO PHILOSOPHY. 

capital would migrate from the better to the worse soils as fast ag 
it could earn in the new location this ordinary rate of profit, and 
would leave behind it for the landlord in the form of rent what- 
ever excess it might earn above this ordinary rate of profit. The 
highest rates of profit, however, are sometimes made where the 
highest rents are paid, and sometimes where no rents are paid. 
The London and provincial banks of England quite generally 
make dividends of twenty to twenty-five per cent. , though their 
rents are as high as any known, since their business demands as 
good locations. 

Whaling-ships and privateers also may make high rates of profit 
and pay no rent at all. Perhaps no vessels can px'operly be said 
to pay a rent. Nor does capital show any disposition to seek out 
a landlord for vessels which pay a high profit, and pay to him the 
difference between what it can earn m the use of those vessels 
and what it can earn by sailing the meanest hulks afloat. 

That there is a very uniform ratio between rates of interest and 
rates of rent is familiar to all. But this arises partly because 
rates of rent are always estimated, not upon the actual cost of land 
and buildings, but upon a capitalized sum which is virtually 
arrived at by calculating the principal sum on which the actual 
rents will pay the interest at current interest rates, together 
with taxes, insurance, and a moderate profit for the greater 
trouble of real estate investments. Hence the ordinary so-called 
rent-rate is, in fact, not a rent-rate in any original sense, i. e., it 
is not a sum computable from facts relating to the land, its area, 
cost of improvements, or the like, but the rent is itself the original 
factor, and from this the value of land is arrived at as the prin- 
cipal on which the rent will pay interest.* 

A good deal of efPort has been expended to prove what Mr. 
Mill calls "the tendency of profits to a minimum" and what 
Henry C. Carey styles "the diminution in the value of capital as 
indicated by the diminution in the share of its product which is 
given for its use by those who, unable to purchase, desire to hire 
it." As relates to each particular enterprise in which profits are 
won, this is more than true, indeed, it is inadequate to the truth. 
Profits may be said to begin at unlimited figures, and to recede 
rapidly until, as profits proper, they totally disappear. Each par- 
ticular mode of investment of capital invites a competition from 



* Adam Smith (Book ii.,Ch. iv.) Bays "the ordinary maiket price of land depends 
everywhere on the ordinary market rate of interest. " 



PROFITS ARE IN THE NEW. 195 

others, a rise of wages, rent, and interest, until these swallow up 
all the returns. If this were not so, profit would not be the migra- 
tory force which pioneers the way to new fields, processes, and 
modes. 

But when this doctrine, of the tendency of profits toward elim- 
ination, is transferred from a law of each individual investment 
of capital, and is stated as a " tendency of profits to fall as society 
advances," as Mr. Mill plainly puts it, and as Dr. Carey and Mr. 
Atkinson seem to, it is a palpable absurdity which would be at 
war with the potential progress of society if it could be true, and 
in conflict with daily observation. Capital in mining, at the out- 
break of the California and Australian mining epoch, made such 
profits that percentages were lost sight of. Bonanza farming has 
made profits of five or six hundred per cent, per annum. Divide 
A. T. Stewart's fortune of $80,000,000 over fifty years, and esti- 
mate it as a "profit" on the capital of $4,000, with which he 
started. It would be $1,600,000 a year, or an average of four 
hundred times his first capital each year. So of other large for- 
tunes. All observation indicates that as large profits are arising 
in the new industries as the old gave rise to when they were 
new, or, to use the old adage, there are ' ' always as good fish left 
in the sea as ever were caught out." 



CHAPTER VI. 

CAPITAL. 

75. Definitions. — Capital is that portion of wealth employed 
in distributing' or producing wealth or commodities. The dis- 
tribution, consumption, and production of commodities is to be 
carefully distinguished from the distribution, consumption, or 
production of the wealth, or the values, at any time embodied in 
those commodities. 

When corn is sent from Dakota to Massachusetts, Pennsylvania, 
and Liverpool, commodities are disti'ibuted. The agents in the 
distribution of commodities are trade, commerce, and transporta- 
tion. When the price which the corn brings is divided between 
the transporter, the middleman, the merchant, the banker, the 
landowner, the land-farmer, the laborer, the tax-collector, the 
school-teacher, and all others who get any share of it or whose 
services aid in its production, that process is called the distribution 
of wealth. The two movements are therefore in opposite direc- 
tions and of opposite kinds. One is production or taking to 
market— satisfying want. The other is payment— getting home 
with the price — being rewarded. The former is visible, material, 
easily understood. The latter is subtle, evasive, and concealed. 
In the process the prices received for the corn must, on the average, 
pay the freight of the transporter, the interest of tiie banker who 
loaned money to the farmer to help him produce the corn, the 
commissions of the middleman, the taxes paid on the land, the 
teacher who taught the farmer's children, and perhaps the preacher 
who pi'eached to them. But the most obvious things to be paid 
for are the use of the land, the interest on the capital, the reward 
to the enterprise, and the wages of the labor that produced the 
corn. 

If the wealth were not distributed among the producers, the 
commodities, in which it is embodied, would not be produced. But 
IJroducing the commodity is not identical with i^roducing the 
wealth it embodies. Corn, when reaped in Dakota, is, as a com- 
modity in the ordinary sense, as completely produced as it will 



CAPITAL ORE A TE8 LABOR. 1 9 7 

ever be. This ordinary sense is not a very true sense, since things 
are commodities only as they commode people, and as there is no 
body in Dakota who wants that portion of the corn which is sur- 
plus, it is much less a commodity there than it will be in New 
York. The word commodity is a word of value, and the value in 
the corn will keep inci'easing- as it approaches nearer to those 
consumers of whose esteem and need the value is the measure. 

Since capital is the portion of wealth which is devoted first to 
bringing the corn into existence as corn (viz., land, plows, cul- 
tivators, money for seed, etc.), and then to enhancing its value 
by forwarding it to those who value it, it may be said that the 
function of capital is to create labor, commodities, and values, 
as labor, commodities, and values, whenever employed in 
certain ways, become capital. Capital is etymologically that 
which leads or commands or has the headship in industry, froixi 
caputs head. Economically it is exactly what it is etymologically. 
It would never have seemed to be any thing else, had not a 
desii'e grown up to define words in a way to win votes, instead 
of with a view to scientific precision. As capital has no vote, 
while those whose labor it creates have, it was deemed courteous 
to call attention only to the fact that labor creates capital, without 
calling counter-attention to its complement, that capital creates 
labor. The circle is the same as in the case of the Qgg and the 
living animal. "All life from the egg'''' is no truer than "every 
%gg from life." Omnium vivum ex ovo finds its complement in 
omnium ovum ex vivo. So of capital and laboi', each hatches 
the other. 

Nor is the consumption of commodities the same as the con- 
sumption of wealth. When an egg is hatched out into a chicken 
a commodity is consumed, for no egg exists, and a new com- 
modity is produced in its stead. But there has been no con- 
sumptioia of wealth, as in each stage of the process value was 
inci'easing. So in drawing a train of cars coal is burned, but this, 
though a consumption of a commodity, is no more a consumption 
of wealth than is a laborer's sweat, for, as in human labor more 
than the value of the labor, and generally twice as much, passes 
into the commodity, so in the transportation of corn to market by 
rail more than twice the value of the commodities consumed in 
effecting the transportation are embodied in. the corn, i.e. the 
purchaser in New York or Liverpool values it higher as it draws 
nearer to him by more than the cost of the fuel and wages, freight, 
intei'est, rent, and profits incurred in bringing it. 



198 EVONOMIG PHILOSOPHY. 

When consumplion of commodities is pai't of the mieans of 
enhancing value, it is reproductive consumption, and is a phase 
of productive energy. Nor does destruction of wealth always 
imply destruction of the commodity. When things are made at 
a loss commodities are created but wealth diminishes. 

Capital is frequently designated as fixed or circulating. Fixed 
capital implies all reproductive wealth that can be used again and 
again in its function without change of efficiency or change of 
ownership. Fuel and food are circulating capital, because in 
a single use they lose their efficiency as fuel and food. Money is 
circulating capital, as to the person who pays and receives it, 
because capable of but one use, for the tiixie, by one person. But 
the unexportable stock of money, at any time existing in a country, 
may be viewed as fixed capital as to the aggregate society of that 
country, because its social efficiency is greater the oftener it 
changes hands.* 

76. Distribution of Wealth Precedes and Causes 
Production. — If we are right in the foregoing definitions, it 
will be evident that, as it is the consumption of commodities that 
creates the effective demand for them, so it is the distribution of 
wealth that causes the production of commodities ; for men 
co-operate in producing commodities, only as they are presently 
or efficiently incited to co-operate, by being paid to co-operate. 
Hence it is that distribution precedes and causes production, viz., 
rent must be paid, I'aw materials must be bought, men must be 
hired, machinery must be collected, subsistence for the men must 
be had and maintained, a contract for a job must be agreed upon, 
all before production can begin. But each of these acts involves 
a distribution or paying out of wealth, viz., rent of plant, interest 
on capital, wages of labor, and profits on raw materials. It is 
because distribution precedes production that only those who have 
the power to distribute wealth can produce it in person and 
originally. All who have no capital are mere instruments of 
production. They can neither dictate its course, its mode, nor its 

* Mr. Moody (" Land aHd Labor," p. 179) objects to the statement that circulating 
capital, i.e., money, to the amount of $270,000,000 was converted into fixed capital iu 
1882 by the expenditure of that sum in building railroads, because, as he says, the 
money is still circulating. This is true as to society, but noc true as to those who paid 
out the money. They no longer have it for circulation. If we assume that had they 
not built the railroads they would have paid it for the same labor to raise wheat, and 
that the added wheat would have been worth it, there would have been $270,000,000 
more wheat and less railroads where now there is that value more in railroads and leea 
in wheat. 



SOGIETT IS JUST. 199 

terms. If they seek to do so through strikes or labor contests, it 
is only by distributing wealth out of their own funds that they 
can secure the degree of co-operation necessary to produce even a 
strike. Hence, even in producing an obstruction to industry, 
distribution precedes pi'oduction. Hence, too, it is hopeless to 
attemj)t to comprehend the phenomena of social industry excej)t 
by. beginning at the distribution, not of commodities, but of 
wealth. And it is chiefly because, Adam Smith, Ricardo, 
Malthus, and Mill have begun at labor and production (meaning 
by labor the condition of unaided destitution, and by production 
whatever labor does) that they have founded not only their own 
school of laissez faire economists, which make unaided labor the 
sole producer, but indirectly and by reflex action they have also 
founded the German, English, and American school of social 
anarchists, who propose that unaided labor, having produced all 
the wealth, shall have it all. 

77. Is Economic Distribution Just? — The unequal dis- 
tribution of wealth has been confessed to be unjust and unneces- 
sary by the mass of mankind, by many statesmen, and by most 
economists, without discussion or examination. The more dis- 
posed the mind is to regard undirected and empty-handed labor 
as transacting the whole business of life, a disposition which in 
many minds rises into an infatuation easily mistaken for benev- 
olence, the more plaintive will be its outcry against one man 
having more than another. Thus, Adam Smith,* after speaking 
of servants, laborers, and workmen of different kinds as ' ' mak- 
ing up the far greater part of every great political society, " says 
" it is but equity, besides, that they who feed, clothe, and lodge 
the whole body of the people should have such a share of the 
produce of their own labor as to be themselves tolerably well fed, 
clothed, and lodged. " 

The answer to this is, it is but equity that they who obtain the 
initiative in all industry, who set all labor in motion at their own 
risk, and provide it with its work, implements, and subsistence, 
and market its product, should be recognized by a professional 
economist as having done something toward the creation of labor, 
instead of being maligned as the crafty purloiners of what they 
have had no hand in producing. If it were true that " servants, 
laborers, and (wages) workmen" do "feed, clothe, and lodge the 
whole body of the people, " then Adam Smith would not be teacli- 

* McCiilloch'8 " Wealth of Nations," p. 30. 



200 ECONOMIC PHILOSOPHY. 

ing sound equity in saying that the robbers should give up 
enough to feed and clothe the producers comfortably. An honest 
conscienced world will spurn with scorn any such inealy-mouthed 
compromise with felony as Smith i3roposes. Karl Marx would be 
right in saying the profit-makers should give up all, which they 
did not produce, to the last red cent. Political economy must 
prove society to be in accord with exact and minute justice, and 
with true, profound, far-reaching philanthropy, as well as with 
natural law, before it can become the satisfactory science of 
society. We believe the philanthropy of economic science to be 
the major key in social harmony, and the philanthropy of im- 
pulse and sentiment to be excellent within jDroper limits, but a 
n:iinor and subordinate key to human welfare. It is the rains and 
the rivers of natural economic law that chiefly bless mankind, not 
the levees, stop gaps, umbrellas, dams, and make-shifts, which 
enable us to fight the rains and rivers at times. So the principles 
of economic law which govern social industry claim scientific 
recognition as the commanding forces which contribute to the 
woi'ld's comfort, without in any way denying that when these 
fail, or are too crude or brutal, finer and n:iore delicate impulses 
summon us to works of impulsive charity. So in the Hebrew 
economy, they who plowed and sowed the fields with grain 
reaped, as the major rule, but the widow and fatherless, who 
neither sowed nor reaped, must also be allowed to glean after the 
reapers. This was the minor rule. These two rules refiect the 
relation which business bears to charity at all times. But when 
industry is so misinterpreted as to become robbery, charity, by 
the same token, becomes insult. Hence it is that even the right 
apprehension of the true nature and mission of the altruistic senti- 
ments becomes impossible imtil the proper exercise of the egoistic 
is justified and defended. Society denies the right of industry to 
be kind or generous, until what is characterized as industi'y is 
first shown to be inhei'ently just and humane. That can not be 
done on the bases assumed by Smith and Mill. 

Mr. Mill says* that, ' ' while the laws and conditions of the pro- 
duction of wealth partake of the qualities of physical truths," in 
which there is "nothing optional or arbitrary," it "is not so 
with the distribution of wealth. That is a matter of human insti- 
tution solely. . . . The distribution of wealth depends on the 
laws and customs of society." 

* " Political Enonomy," vol. ii. 



MILL ON DISTRIBUTION. 201 

It is amazing tliat Mr. Mill should think that, if legislatures 
chose to enact it, wealth and capital could be maintained in a 
state of constant equal distribution among all j)ersons, or that it 
could, perchance, be distributed in such unequal portions that 
honesty, piety, learning, complexion, personal beauty, or popu- 
larity, should get whatever excess over the share which would 
befall the lack of these qualities a legislature should see fit 
to enact. But ' he distinctly affirms that wealth-disti-ibution 
depends on parliamentary and judge-made law, and on such 
customs as society may choose to enact for itself. "The 
rules by which it is determined," he says, "are what the 
opinions and feelings of the ruling portion of the com- 
munity make them." But how comes there to be "a ruling 
portion of the community ?" Why should one portion of the com- 
munity be ruled by another ? Only because one portion has 
wealth and the other is in poverty. If Crusoe has a boat, fish- 
ing-tackle, and bait, and Friday has none, then Crusoe is capital, 
and Friday is labor, i. e., Crusoe has got in his power the results 
of work already done, Friday has got a hungry body which is 
willing to work if enabled to do so. Work done commands the 
mei'e willingness to work. This is the rule of capital over labor. 
It is plenty commanding destitution, distribution commanding 
production. 

Mr. Mill holds that wealth is unequally distributed because 
those who have it distribute it unequally, between themselves and 
those who haven't it. That inequality whereby a jiortion of 
society rules, is due to the fact that the portion which rules rules 
unequally. Inequality causes the persons, laws, and customs of 
society to be unequal. Mr. Mill's cause, is the consequence of its 
own effect, and his effect produces its cause ! 

78. Dispersion of Capital Is a Mode of Destroying It. — 
Wealth being a power, and all power being poAverless when re- 
sisted by an equal power, it follows that to equalize wealth, as be- 
tween those who are to wield its power and those over whom it 
is to be exercised, is to destroy it. Wealth does not consist in 
means, but in inequality of means. Portions of wealth co-oper- 
ating, as among shareholders, to control labor, strengthen each 
other. But two portions of wealth, each seeking to com- 
mand the service of the possessor of the other, paralyze each 
other. Hence, between two persons of equal powers in all re- 
spects, and of equal wealth, the phenomenon of one employing 
the other to do any thing whatever, would be an absurdity. The 



202 EGONOMIG PHILOSOPHY. 

story is told of Mr. Stephen Girard, of Philadelphia, that, bemg 
one day at the market purchasing provisions for his family, a 
pompous fellow of great pretense, but of small means, mistook 
the plainly clad millionaire for a laborer or porter. 

"Here, my good fellow," said he to Girard patronizingly, 
" don't lose your time moon-gazing, but shoulder this basket of 
mine, and earn a shilling by carrying it home for me. I live just 
beyond the residence of that tight old fellow, Stephen Girard. If 
you don't know me, you may know him. Will you go ? " 

" Certainly, " said Girard. Shouldering the man's basket, he 
followed the stranger to his door and received his fee. 

" By-the-way, " said his customer, " I may have occasion to 
use you again; have you a card with you? " 

' ' I have no card, " replied the rich man ; ' ' but you can j)rob- 
ably find me by inquiring. My name is Stephen Girard." 

Here the absurdity of a jDOor man employing a rich one to 
render a menial service is so palpable, and the willingness of the 
millionaire to render it becomes so liumiliating, that only the 
sheerest combination of effrontery and ignorance on one side, and 
of quiet wit and equanimity on the other, could effect the climax. 
Essentially, the rule is universal that only the relatively poor are 
open toenjployment, and only those having more means can 
employ them. Out of this inequality grows the only power that 
wealth possesses, as one can very soon learn by undertaking to 
employ one much richer than himself to render any physical 
service. 

The same point may be tested in another way. Divide the 
whole wealth of the people of the United States, $54,000,000,000, 
among the whole people equally; $54,000,000,000 divided among 
54,000,000 persons gives to each person $1,000. No one has more, 
no one less. Of this sum $600 is in land, and $400 is in personal 
property. If the land were divided according to area, instead of 
value, each one would have 43 acres. If a person now has either 
of these sums, what can he do with them? He can use them only 
for consumption, or for storing value temporarily against 
immediate want. But neither consumable values nor stored 
values are capital. Hence, as capital, they have ceased to exist. 
But no person having so small a sum could safely invest it in any 
railway, bank, factory, municipal debt, or like seciu'ity. No 
corporate enterprise could be permanently conducted which con- 
sisted of so many small shareholders. It would be a mob, not a 
directoi'ate. The New York Central Railway w^ould have 200,000 



EGONOMIG LA W IS HUMANE. 203 

shareholders, or as many as there are adult males in New York 
city. Hence the great concerns which now constitute our capital 
enterprises, and which employ probably three-fourths of the 
labor of Great Britain, France, Germany, and America, could 
have no existence. For, as large foi'ces of workmen practice a 
division of labor which small ones can not, so large capitals can 
effect a subdivision of their potency in the form of credit to many 
more persons, functions, and places than a small one. This 
increase in the potency of capital, through credit, magnifies much 
more rapidly than the capital. (A penniless adventurer who 
caused it to be believed that he had come over from England with 
five millions to loan, but had not, in fact, the means of paying a 
single hack hire, was enabled on this false credit to open a bank- 
ing house in Wall Street, receive deposits, buy a country estate, 
horses and carriages, entertain largely, etc. His credit worked 
in all ways and dii'ections.) 

To subdivide capital is, in this sense, to destroy it. But without 
these banks, manufactories, shipping lines, mining enterprises, 
all commercial interchange and association arnong men, in the 
degree adequate to maintain existing industries and civilization, 
would be not only impeded but paralyzed. Equality would be 
annihilation. What the socialist describes as justice would be 
famine. The radically equalized mob would surrender to military 
force, in order that through an abject abnegation of its liberties it 
might begin again in social slavery, and thence emerge and 
return to its present condition of reciprocal heljpf ulness and mutual 
freedom. 

79. How Distribution of Wealth Attends Its Cumula- 
tion, and Getting Ricli Is Doing- Good.— Is there any 
economic law which causes men to create and distribute the com- 
modities of which others have need, and in so doing to distribute 
the price of the commodity back among its producers with that 
perfect equity which shall reward each according to his economic 
mei'it, but, if he fail of economic merit, shall still supply him 
according to his need? 

Why should Chinamen interest themselves in carrying bales 
of tea, or raw silk, on then* backs over the mountains, so that we 
may enjoy them ? It is because the wage of his day's service 
comes to him at sundown, indirectly and through various 
bankers in advance, but ultimately, and very straightly, from those 
who will wear his silk and drink his tea. But for this distribu- 
tion of wages to him, he would not be producing, but probably 



204 ECONOMIC PHILOSOPHY. 

fighting or hunting. A process of mutual obsequious service 
goes on hourly between strangers all over the vs^orld, commerce 
consisting of a duplex system in which commodities and services 
are going one way, and their equivalents are returning. As the 
commodities unite in the currents of transportation, they become 
great cargoes. As the payments divide in the return currents of 
distribution, they become as small as the finest atom of sugar that 
can be detected by the nerves of taste. Mr. Jevons happily states 
this iaw to be, that value is due to need, and declines witli satiety, 
in each individual. Owmg to the fact that his capacity to con- 
sume any one thing is very limited, while his capacity to produce 
many things is almost boundless, as is also his desire to possess 
the products of others, a decline, in the value of all he produces 
over his own need, can only be prevented by his forwarding the 
surplus to him who needs it most, such last named need being 
expressed economically by the value of the return service he 
is "willing to render. As there is no limit to the degree in 
which one can desire the products of others' labor, so there 
can be ■ no limit to the degree in which he shall be 
stimulated to produce, however small may be his capa- 
city to consume the verj^ thing he produces. Every com- 
moodity declines in value in the degree that it exists in surplus 
at the point of production, but advances in value as it approaches 
him who most needs it. This law of declining and advancing 
values is the steam which propels the social mechanism. It is 
the involuntary philanthropic force which mainly feeds, shelters, 
clothes, employs, nerves, sti)nulates, educates, and governs the 
world, first in its industries, and then, where its industries fail to 
give relief, in its charities, which are as it were, its industries '\\\ 
the minor key. For charity is evolved among men because it is 
valued ; it comes in obedience to demand. Where gifts are 
highly esteemed they are made ; where effort for others is appre- 
ciated it is put forth. For all moral and religious, heroic, 
humane, and charitable effort results in a subtler and more spirit-- 
ual form of profit, carrying with it an increase of social and spirit- 
ual capital and power, which to finer natures, is more regarded 
than money. 

80. The Greater tlie Accuniiilatioiis of Reproductive 
Wealth the More Equal the Diflfusion of Enjoyable 
Wealth. — To insure a complete and effective distribution of 
wealth among mankind, involves the expenditure of an enormous 
labor power, and the pressure of the most terrible persistency of 



WHAT AVARICE COSTS. 205 

motive. It is accomplished so perfectly that cases of physical 
suffering' are extremely rare in all parts of the world, are usually 
associated with gi'eat imprudence or with stubborn vices, and 
are easily connected by even a brief return to prudent ways. To 
insure this pressure of motive, wealth is divided into two kinds, 
one of which can be the object of only a limited avarice, and then 
immediately satiates, viz., enjoyable or consumable wealtli, and 
the other of which, reproductive wealth, is the subject of custody 
and the means of social power, and can not be directly enjoyed.* 
So instinctively do all men assume this truth that to assume the 
opposite surprises us with a sense of humor. 

Col. Ingersoll effects this surprise, which is of the essence of 
hnmor, when he says, "How absurd that a man who already has 
1,000,000 neckties, of which he can only use one a day, should 
work all day to get another necktie." The absurdity consists in 
selecting as the object of avarice a form of consumable wealth, 
instead of those forms in which wealth may be stored for ostenta- 
tion, as gold and diamonds, or by which it may be reproduced, as 
money, houses, lands, ships, banks, factories, machinery, etc. 
The passion of avarice can not be excited in favor of consumable 
wealth, except as it may constitute a merchant's stock of goods 
while it is in reproductive use. No miser works all day for an- 
other necktie, or apple, or orange. The passion of avarice can 
only be felt for those forms of wealth whose accumulation in 
large masses is a means of production, or of distribution, or of os- 
tentation, or of security, or in some way ministers to more per- 
manent wants than enjoyable wealth does, chiefly in the organi- 
zation of society. The one might be called individual, pleasui*- 
able, sensational, transient, emotional, perishable wealth. The 
other is social, instrumental, indirect, reproductive, capitalistic 
wealth. Food, raiment, shelter, works of art, entertainment 
and instruction, music, books, pictures, etc., are enjoyable wealth, 
though all of them become reproductive capital when gathered 
in stocks for sale, and the more permanent of them approach re- 
productive wealth, and often cross and recross the boundaries. 
Power's " Eve " or Church's " Niagara," exhibited for an admis- 



* Prof. Henry Sidgvvick (" Principles Political Economy," p. 86) says there is " need 
of a broad distinction between the two pirtions of a country's material wealth, which 
may be distinguished as consumer's wealth and producer's wealth respectively. By 
consumer's wealth I mean such material things as . . . are directly available for 
satisfying human needs and desires, producer's wealth (and similarly of course pro- 
ducer's services) being only useful indirectly ag a, means of obtaining the former." 



206 ECONOMIC nilLOSOrHT. 

sion fee, is reproductive wealth. Placed in a private residence 
it is an aesthetic and high grade of enjoyable w^ealth, useful, also, 
like gold or diamonds, for storing wealth, and resembling repi'o- 
ductive wealtli in tlie fact that while the title to it may be private, 
its highest uses are social. Arms, factories, roads, and their means 
of conveyance, mines, ships, sliops, stores, banks, machinery, 
money, are all reproductive wealth. Mankind are chiefly in- 
terested, both from the economic and the humane point of view, 
in a distribution of these several kinds of wealth in divers ways. 
Consumable commodities need to be so distributed that the 
capacity of each individual to consume, especially clothmg, 
raiment, and shelter, shall be satisfied. Consumable wealth, 
when returning in payment for commodities, needs to be so dis- 
tributed that each agent in xiroduction, capital, labor, land, skill 
in management, etc., shall be paid in proportion to the degree in 
which it aids production. Reproductive wealth, since it can not 
be directly enjoyed by the body, needs to be so allotted that man- 
kind shall get its most abundant and effective use on the most 
economic terms and in the most convenient way. 

The farmer's wheat is governed in value by the law of satiety. 
All that he and his family can not eat becomes worthless, except 
as he can send it to those who produce no wheat. The question, 
what distributive share of the price the farmer will get, depends 
on how much of the price which it sells for in New York or 
Massachusetts will have to be deducted for railway freight, and 
paid out for wages and rent of land, or interest on capital. This 
depends on the economic laws governing the use by society of 
reproductive wealth. One of the most important of these is that, 
the greater the accumulation and concentration of reproductive 
capital under a single control, the lower will be the rate per cent, 
at which society can get its use, and the greater will be the 
number and variety of the use, it will render. 

Here, therefore, are two laws, both appealing to the same pas- 
sion of gain, with equal potency but in opposite directions. The 
law of satiety, confined to consumable commodities, says to 
their owner, " Away with them to those who are in need, send 
them swiftest to where the want is greatest. " The Law of 
Economy of Capital says, ' ' The greater your capital the cheaper 
must its use be lent to the producers and consumers of consuma- 
ble wealth." Society's interest, therefore, is in making con- 
sumable goods repulsive to the owner, producer, and capitalist 
the instant a supply sufficient for hnmediate need is obtained. 



WEALTH GETTING IS LIFE GIVING. 207 

But society's interest is also that the accumulation of repi'oductive 
wealth, which is mere control or management, and not consump- 
tion, shall g'o on under the sway of an ambition that is insatiable, 
until it results in a power larger than its owner has the capacity 
to use profitably — a fact which is both made known, and cor- 
rected, by the fact that he begins to in vest unprofltably — therefore 
to lose on his investments, and thereby to disperse his capital. 

The function of all reproductive wealth, i. e. , wealth that earns 
or makes wealth, is either to create consumable commodities, as 
is done by the farmer, manufacturer, mechanic, artist, etc. ; or to 
forward the consumable commodities as rapidly as possible to 
their consumers, as is done by ships, railways, carts, and wagons, 
steam-powei', mule-power, porter-power; or to distribute the 
ownership, and subdivide the title to it, among all these con- 
sumers, as is done by merchants, traders, exporters, and middle- 
men ; or to fi.x stable and uniform j)i'ices on commodities, so that 
profits and wages may be made steady, by steadying that surplus, 
of price over cost of production, out of which profits and wages 
arise, as is done by produce exchanges and boards of trade ; or to 
receive from consumers and transmit to producers the returns or 
means of payment, as is done by banks, by coin, and by all 
agencies that issue money ; or to distribute these means of pay- 
ment among pi'oducers according to their several shares, as is 
done by the entrepreneur and capitalist in employing labor, 
hiring land and money, and paying out rent, wages, and interest; 
or to maintain order, observance of contracts, and integrity among 
all these interests, as is done by courts of law ; or to create such a 
popular conscience, as will alleviate the cases of failure and suf- 
fering to which the industrial life is in exceptional cases subject, 
as is done by religious, masonic, co-operative, philanthropic, and 
benevolent agencies for aiding the bereaved, defective, delin- 
quent, and unsuccessful classes. 

Reproductive capital is to society, relative to consumable com- 
modities, what the engines, tunnels, aqueducts, and water-pipes of 
a great city are relatively to the water which they bear to the 
thirsty, viz., means of forcing it from the point where it exists iu 
sui'plus, and is therefore useless, to the million points where it is 
not only needed, but most needed, the degi'ee of need being al- 
ways certified in economics by the return of effort or price the 
supply will bring. 

The question whether unequal diffusion of wealth is favorable 
to all the other interests of society as it is to production, whether 



208 ECONOMIC PHILOSOPET. 

it promotes the highest development of intellectual ability, a 
wide diffusion of education, free republican institutions, or good 
morals and kindly and neighborly feeling among men, is im- 
portant but not strictly economic. It is because, what has been 
so freely and frequently said, and conceded, on these grounds, in 
behalf of equality in the diffusion of wealth, has caused a part of 
society to question the economic necessity and justice of any in- 
equality, that a defense of inequality from the economic stand- 
point is necessary. 

81. -Capital as a Laborer. — Who first made the estimate, 
that the machine-power of England is equal to the manual labor- 
power of six hundred millions of people, I can not say. It has been 
widely current nearly fifty years, and, whether accurate in detail 
or not, expresses a general truth of the first importance, viz., that 
in modern history, since the advent of steam and steel, capital, 
through these agencies, utterly dwai'fs manual labor in its power 
to produce commodities. If labor be defined, as the direction of 
effective natural force toward the production of commodities or 
services for the relief of human want, which is manifestly its 
broadest purpose, it occurs that by far the lai'gest portion of the 
world's work is now done by capital, not in its employing capacity, 
but in its capacity as a physical toiler and a displacer of human 
toil. Capital, in the form of engines, boilers, tracks, and other 
rolling stock draws all crops to market in Western nations, 
leaving men to carry them on their backs only in China and parts 
of India. Capital, in the form of spinning jennies and power 
looms, does all the weaving of cloth. Capital, mainly, lifts the 
coal, and melts the ore, and hammers the iron. Capital sets the 
type, prints the newspaper, and transmits the news electrically 
over its wires. Capital constructs watches, predicts the weather, 
engraves, sews, and carves. Almost all of what is called skilled 
labor now consists in the wages-worker acting as tender, feeder, 
or regulator to the working machine. Hence old-time positions 
are reversed. Once labor toiled physically and capital superin- 
tended. Now, in the mam, capital performs the physical toil and 
labor superintends the machine while it does the work. 

Thus, on the elevated railways in New York city, all that tho 
employes are hired to do, is to simply do a little hnowing. The. 
change-taker must know that the ticket does not pass out to the 
passenger until it is paid for. The ticket-man must know that 
the ticket is dropped when the passenger passes through to the 
platform. The gate-man must know that the train has stopped 



CAPITAL EXPELLING LABOR. 209 

before the passenger tries to get on or off — and that all are on or 
off before he signals the engineer to start. Finally, the engineer 
must know that he is signaled before he starts. Not one of all 
these employes performs a stroke of work that could not be pei*- 
formed by touching a spring with the little finger. 

This revolution has several economic effects of the utmost im- 
portance. It makes every effoi't of human labor, to work produc- 
tively without the aid of capital, impossible. A man can not walk, 
from New York to Chicago, so cheaply as he can pay his fare. 
The difference in cost of subsistence and lodging while going 
would make walking the costlier of the two. So, on no tei^ms of 
cheapness, can unaided labor compete with capital, in the form of 
machinery. Yet, as capital in these machines does the same 
work as labor would otherwise do, it fixes the wages of labor, or 
the value of the share which manual labor can earn by doing it. 
This is admitted by Kaii Marx, and forms the chief reason why 
he says the mass of society should be the owners of the instru- 
ments of production. On the introduction of spinning and 
weaving machinery in England, the spinners and weavers felt 
their suj)ersedure so keenly that they gathered in wild, riotous 
mobs and broke the machines. Pretty soon their services came 
into use in working the new machines, and the demand for En- 
glish labor was rather greater than before, and wages rose. But 
this rise was due to the fact, that the services of a very much 
larger number of spinners and weavers were undei'going displace- 
ment in China, Turkey, Portugal, the United States, and India. 
The housewife ceased everywhere to be the manufacturer, but 
only in Lancashire did the housewife get the profit of her super- 
sedure, in the form of employment on the new looms. But for 
this widening of the market, the class who went out of employ- 
ment in England must have remained without, at least in any de- 
partment of weaving. 

The performance of work, by capital, always works an immedi- 
ate supersedure of the laborer, and only re-employs him in the 
same general industry in case the market for its commodity is 
widened. What would become of laborers, asks the socialist, if 
capital should advance in the use of machinery until it could per- 
form absolutely all labor without invoking human aid at any 
point? It could do all, and possess all, and where then would labor 
be? 

The logical answer to this question would be that, if capital 
could manufacture the machinery of production without the help 



210 ECONOMIC PHILOSOPHY. 

of labor, it would turn it out so cheap that a soiig would buy an 
engine, and the machinery of production could not, by the terms 
of the proposition, any longer bear a price. 

An increased amount of co-operation in production, a spirit of 
greater mutual subserviency, is necessary in consequence of the 
great part of the work done by capital. Tlie only men who can 
fit into the new industrial order are tlie the men of tact, wlio can 
accept discipline readily and obey orders implicitly, for only 
through such men can a wide organization of labor and capital, in 
industry, be effected. This causes the highest rewards of indus- 
try to come to the organizers. Their value is so generally recog- 
nized that it makes but little difference in their income, whether 
they work with their own capitals for profit, or manage the capi- 
tals of others for salaries. On the contrary, it becomes difficult for 
the recalcitrant, " cranky," indej)endent, and insubordinate class 
of workers to work in the more condensed center's of industry. 
Their best interest is to move out toward the periphery of the 
societary circle, where less subserviency to central headship is re- 
quired and moi'e personal independence is jDermitted. Hence the 
desire of every man " to be his own boss " prompts the class whose 
individuality is strong, to leave the centers of industry, where 
capitals rule, for the pioneer life, which can still be had by those 
who seek. On the frontier the capitals are still small, machinery 
has not yet superseded hand-labor, and there is less power, but 
more liberty. 

82. Forms of Capital. — Are land, debt and credit, money, 
reputation, good- will, forms of capital when employed reproduc- 
tively and for a profit ? If they are capital, as between individuals, 
do they necessarily become additions to the aggregate capital of 
all the individuals in a country, to the same extent as they become 
capital between borrower and lender ? And if so, what distinc- 
tion is there between manufacturing capital and running in debt ? 
The difficulty in assigning to land the quality of capital arises partly 
from the fact that "capital" has been by some defined as the 
"fruit of abstinence," while title to land is, on the contrary, the 
fruit of appropriation. The power to appropriate land, however, 
arises always in connection with a prior expenditure in the nature 
of abstinence of various kinds, but more usually abstinence from 
the attractions, and high rewards, and high wages and ready 
amusements, of a compact social life. A century ago the tendency 
of economists was to speak of capital as the fund expended upon 
land, rather than as including the land itself. 



WHAT IS CAPITAL. 211 

We tliink it more exact, to regard every economic term as bear- 
ing a cliange of definition, according to the clianged aspect in 
which it is presented, or the change in tlie function it performs. 
Land may be cajDital to one, and a mere burden on the cajjital of 
another. If a publislier have $50,000 of capital invested in his 
business, and withdraw $15,000 of it to ijivest in a residence, in 
this case, and so far forth, his land is a deduction from his capi- 
tal. If, however, he farms his land, or converts it into a driving 
park, in a manner that intends profit, it" becomes capital, even 
though he lose on it, but it is an unprofitable investment of capi- 
tal. • So far as giving mortgages on land, or otherwise incui*ring 
debt, leads to a profit which otherwise could not be had, they are 
capital. The antithesis of capital is not properly labor, but either 
lack of means — destitution — or means not set in motion to pro- 
duce pi'ofit — i. e., a hoard. Capital is means in motion — wealth 
at work — financial energy in action. It differs from a mere 
hoard as steam from water, or a river from a pool, or life from 
death. 

The incurment of a great national debt, during war, is frequently 
spoken of as an unx'edeemed waste of capital, as the firing of 
Avealth out of the mouth of cannon, etc. This mode of expres- 
sion comes into conflict with a broad popular sense that such 
periods are also periods of an extraordinary activity of exchange, 
stimulus to production, and creation of wealth. To whatever 
extent running in debt, or the creation of credits, or even the de- 
struction of values, gives rise to profits which else would not have 
existed, and increases production as well as consumes products, it 
becomes capital. Much of the loss by the great Chicago fire of 
1871 was offset by the increased activity induced by the rebuild- 
ing. Much of the apparent possibility of gain which attends long 
periods of peace is converted into relative loss by the increasing 
timidity with which capital shrinks from enterprise. Hence the 
histoi'y of the period of England's wai's with Napoleon was, in 
both England and America, one of rapid growth of capital. The 
history of the ensuing peace, from 1816 to 1837, was marked by 
stringency succeeding stringency, and great individual distress, 
and private and public bankruptcy. 

In outward symptoms an expansion of credits lias all the ap- 
pearance of a gro\^i;h of capital. A shrinkage of credits affects 
industry in all its departments as a destruction of capital. Busi- 
ness men will repeat with great conservatism of manner the saying 
that tilings are getting down to their intrinsic values, or down ' ' to 



212 ECONOMIC PHILOSOPHY, 

hard pan, " when property of various kinds declines in value under 
the influence of a general collapse of credit. If it were generally 
undei'stood that value is merely the esteem in which the things are 
held which constitute capital, it would be seen that the process of 
reduction in esteem might go on until all capital and civilization 
had disappeared, and but one inhabitant would be left in the world, 
and he might be fleeing before a pack of wolves, in which case 
" hard pan " would still be just before the fugitive, and his in- 
trinsic value, to the wolf, would not be realized, so long as he 
was able to maintain his flight. 

83. Capital as an Emancipator. — The greatest service, per- 
foi'med by capital for man, consists in having abolished forcible 
slavery, as the means of organizing labor, and substituted for the 
lash the stipulated wage in money. 

It was not merely necessary that money should exist, and be 
generally and actively circulated, before masters would come to 
see a more ready persuasive in wages than in force. It was in- 
dispensable that money should take the form of capital and 
machinery, that it should involve calculations so intricate, 
and labors so arduous in its direction, customers so numerous 
and markets so distant and employes so multiplied, that em- 
ployers should lose both the time and the desire to exert a per- 
sonal tyranny over their men. Workmen may grieve at the 
heartlessness of a given number of hours of their labor being 
treated as a commodity, but how priceless to the slave was this 
boon when it was first granted. It was the very substance of 
emancipation — the essence of freedom. 

The relegation of the former " servant" into a member of the 
" proletariat," over whose hours outside the shop the employer 
had no control, was also in its time emancipation.* 

It may now be said that among all the largest employers of 
labor the desire to rule laborers, for the sake of ruling only, has 
essentially ceased to exist. The model capitalistic employer has 
now no more desire to rule a laborer, apart from the motive of 
profit, than he has to dictate styles to his customers, or prices to 
his sellers of raw materials. The animus toward despotism has 
gone out, and its place is filled by a desire simply to do the 

* Griinlund, " Modern Socialism," p. .56, says : " Progress takes place only when 
either some individuals control other individuals, or when they voluntarily co-operate 
together. But voluntary co-operation is a hard lesson for men to learn, and therefore 
progress has to commence with compulsory organization, with control of every thing, 
with slavery." 



WHAT BECOMES OF WEALTH. 213 

most profitable thing. But this also the workman desires to do. 
If, as we have contended, all the employment of labor is a loan 
of the certain unit of capital essential to employ the laborer, and 
hence is a fair and equal exchange, the laborer dividing the joint 
product equally between himself and the share that hires liim, it 
is obvious that the true and final emancipation from the wage 
condition will consist in tlie laborer buying and owning the capital 
that hires him. He will then be drawing the profit as well as the 
wages. In railroad enterprises tl;e laborer can accomplish this 
result by owning $8,000 of the stock in the road. In manufac- 
turing enterprises he need own only $2,500 of the stock. In 
farming enterprises $1,200 will suffice. When he has bought 
this amount of the capital of the enterprise for which he labors, 
he will be reaping the entii^e profit on the capital with which he 
labors. When all the workmen, on all the roads, shall have placed 
themselves in this position, it can no longer, with truth, be said 
that any one is making a j)i'ofit out of their labor but themselves. 
This would consummate emancipation absolutely. 

84. Redistribution of Ill-Used Wealth.— That invest- 
ment in property of every kind, is a mode of distributing wealth in 
the direction of the greatest demand, appears from the fact that 
to make the property pay a return it must either be improved, or 
it must be reserved for improvements more valuable than it will 
now bear, or its holder will lose all he invests. 

If he loses all he invests, this is certainly an effective distribution 
of his wealth. If he reserves it for improvements more valuable 
than it will now bear, this is part of the process of improvement; 
itself. If he improves it, i.e., puts on buildings for rental, he 
multiplies the supply of shelter and working and living space, 
and makes one investment of his whole capital in labor in the act 
of putting up the buildings. 

If the profit -maker, by means of employing labor and investing 
capital successfully, becomes so wealthy that he desires to live 
luxuriously and ostentatiously, he enters on tlie systematic disper- 
sion of his wealth among the laborers of distant lands, and among 
those classes of the earth's population whose existence is most 
precarious, and who stand most in need of financial help from 
the centers of civilization, because of their distance from civiliza- 
tion and wealth. 

Luxurious living is best adapted to the I'elief of the precarious 
and distant workers, while reproductive industry is best calculated 
to help the near, sure, and strong workers immediately around 



214 ECONOMIC PHIL080PHT: 

us. For the near, sure, and strong workers immediately around 
us will generally be found producing the necessaries of life, since 
the production of the necessaries of life always commands the 
surest returns and pays the steadiest rates of interest on capital. 
Therefore, the investment of capital reproductively employs the 
raisers of the crop, builders of the houses, preparers of the food, 
clothing, and shelter in and on which we subsist. As human 
subsistence depends on these occupations, a fair return must 
always accrue to them somewhere. If the farmers in Ireland 
suffer it must be that farming is carried on in America under 
more favorable conditions, and these the Irish farmer comes to 
America to obtain, Lintil, by the mobility of labor, the conditions 
are pi'oximately equalized. 

85. Distributiou by Luxury. — The luxuries, on the con- 
trary, are precaiiously produced. The hai'dy Norway or Spitz- 
bergen savage ruoves each year ne.arer to the pole in order to 
get with more ease the ermine which is worn by kings and 
judges in the courts of Europe, and the eider down which makes 
the princess' pillow or lines the duchess' cloak, as well as the seal- 
skin which protects the fine lady from the cold in the winter of 
our warmer clime. The negro on the Congo brightens his home 
in the jungle with the return he gets for the ostidch feathers or 
ivory which he sends hither to be worn in ladies' hats or carved 
into elegant designs for ornamenting their bureaus. The moun- 
taineer in Peru or Hindostan toils hard with his herd or pick or 
drill in the mountains, knowing that he can live on the flesh and 
milk of his few goats, and now and then may be made rich with 
the price of the crystal of value which he finds, or even a diamond. 
The Ceylonese pearl-diver is lifted higher, in worldly comfort, by 
the fact that fine ladies in Paris pay for, and wear, the trophies 
which he brings up from the ocean's depths. The Parisian lace- 
maker is poor, and her life precarious, because fine laces can never 
be a strict necessity of life ; but lace-making wards off the wolf of 
hunger, and makes her grateful for the vanity of the wearer of 
fine laces, which are to their maker life itself. The diamond- 
cutters are poor. The diamoiad- wearers are rich, but the diamond- 
cutters are less ijoor than they would be if no one wore 
diamonds. The Spanish peasantry, cultivating grapes and making 
wine on the Pyrenees, are poor, but they are richer than if the 
distant rich abstained from wine. 

The silk and tea growers of China jDroduce what is felt to them 
to be a necessity, and are in such a condition of comfort that 



BELIEF THRO UGH L UX UR Y. 2 1 5 

Adam Smith, though with some error, sj)eaks of China as the 
wealthiest of nations. The growers of roses in Bulgaria, from 
which attar of roses should be made, are poor amidst their flowers, 
but richer because of the foreign market for their luxury. Art is 
a luxury, except in so far as it is a popular amusement. Hence, 
great artists have struggled hard for life, but not so hard as if 
fevver patrons of art had been willing to scatter wealth on pictures. 
Historically, the fine arts have depended on the rich for their 
patronage. These instances show that luxury is often and 
generally the almoner whose benefaction carries relief to the most 
diversified classes, and to the farthest distance, both geographically 
and socially. 

8G. Its Hiinianity Arraigned. — " But, " asks the socialist, 
"is it economically just, or necessary, that wealth shall be so 
unequally distributed that the use of luxuries, by one class in one 
part of the world, shall be necessary to relieve the misery and 
squalor of the poor, in others? " 

Much of the vigor of this anthithesis consists in the assump- 
tion that luxuries are identical with happiness, and that poverty is 
identical with misery and squalor. No social fallacy can be 
more apparent. Those who use luxuries may live in great 
misery. Those whose lives are straitened by want, in a way 
that deprives them of many of the conveniences of life, may have 
better health, sounder minds, and happier lives than those who 
are surrounded by luxuries. Therefore, luxury can not be used 
as the antithesis to misery, but only as the antithesis to plainness 
of living. Prince Albert of England died in his palace, of breath- 
ing sewer gas. Hence he died in and of squalor or filth as truly as 
if he had lived in " Tom-all-Alone's." A. T. Stewart died of dys- 
pepsia. Hence he died of slow starvation, for, if nuti^ition can not 
be carried to the blood, it is starvation to the body, whether it is 
stopped by lack of bread in the pantry or by lack of gastric fluids 
in the stomach. Sir Isaac Newton laboi-ed at times under a de- 
gree of nervous exhaustion through overwork which rendered 
him irritable and unreasonable in his treatment of his friends. 
Profoundly as they admired him, they at such times could not en- 
dure him. Feeling that his own condition bordered on insanity, 
he may not have been as truly blest in his career as the healthy 
and vigorous glass-blower who shaped the lenses for his tele- 
scopes. 

The economic government of the world is such that the prime 
requisites of life, food, clothing, shelter, and society, come to all 



216 ECONOMIC PHILOSOPHY. 

the inhabitants of earth, with casual exceptions that are rarer than 
death by fire or flood. The human body and mind are also so 
elastic that they everywhere depend, for absolute ability to be 
happy, only on these four conditions. Servants are as generally 
happy as masters, the woi'kers as the idle, the poor as the rich, the 
obscure as the famous, the weak as the powerful, the ignorant as 
the learned. The true question, because the true antithesis, must 
not be between wealth and misery, but between luxurious living 
and spare or frugal living. The question, as thus modified, be- 
comes this: Is it economically just, or necessary, that wealth shall 
be so unequally distributed that the use of luxuries, by those who 
have more wealth than they can expend upon necessaries, shall 
conduce to supply those who produce these luxuries with the 
necessaries of life. Viz., food, shelter, clothing and society. In 
this form nothing can be more just, social, or humane. 

There seems to be as strong an inherent necessity in the nature 
of economic science that wealth should be unequally distributed 
as there is in human seiitiment to oppose inequality. The un- 
equal distribution of the ownership of reproductive capital is es- 
sential to the most economic steering or direction of industry, the 
most judicious inauguration of the enterprises which employ capi- 
tal and labor, to the most universal and equal employment of labor, 
to the greatest diffusion and cheapness of the products of labor, 
to the most general equality in the wages of labor, to the most 
rapid and effective production of enjoyable commodities, and to 
the most far-reaching and equal diffusion of these commodities 
for consumption, both with reference to space, time, and numbers. 

We have defined reproductive wealth as that portion vvhich can 
not directly satisfy any want of man, but is employed to promote 
the production of enjoyable commodities. It includes land, labor, 
in certain aspects, machinery, ships, railroads, beasts of burden, 
and all means of transportation, money, whether coin or credit, 
banks, title deeds, and contracts, and the courts of justice for en- 
forcing them, buildings rented for either residence or individual 
occupation, theaters, chui'ches, schools, manufactories, stocks of 
commodities held for Avholesale jobbing and retail, and generally 
every thing that will not be eaten, drunk, worn, or otherwise en- 
joyed, and consumed in being enjoyed, by its present possessor. 
Enjoyable commodities are food, the shelter of home, clothing, 
ornaments, books, and all reading matter, society, instruction, 
amusements, entertainments, plays to him who attends them, 
songs to those who sing and hear them sung, and every act or 



SA VING AND SPENDING. 217 

thing possessing the element of cost or value which ministers 
directly to human gratification or produces pleasurable or desired 
emotion. 

Eeproductive wealth, considered with reference to the use its 
owner will make if it, has three stages, viz. : the j)eriod of absti- 
nence or hoarding, which results in its accumulation ; the period 
of power, in which it is employed to steer or direct the course of in- 
dustry, to inaugurate new enterprises, employ labor, and produce 
commodities and wealth ; and the period of dispersion, waste, or 
altruism, by which it passes to other hands. These three periods 
marking the rise and fall of fortunes, correspond to the periods 
of growth and decay in living organisms. 

87. Society's Gain by Economy. — In the period of absti- 
nence, the worker is working for small returns. Perhaps it is Cor- 
nelius Vanderbilt rowing a boat as a ferry between Staten Island 
and New York for $1 a day or John Roach working in an iron 
foundry for $2.50 a day. In either case, many others are gettin^g 
as much, but few others are saving as much. If another, getting 
the same wages, spends ten cents a day for tobacco, ten more for 
beer, ten more for riding in a stage when he could walk, and thirty 
cents a day for good clothes when he could wear as comfortable 
but less genteel for ten cents, and the penurious man saves the 
entire fifty cents, it is plain tliat while the hoarding is going on, 
the one who does not hoard has more enjoyments, more ease and a 
better time than the one who does. Hence, as to this period, the 
one who will never be rich, has no ground of complaint, and feels 
no sense of injustice, against the one who will. 

When the saving of fifty cents a day has gone on for a year, 
it represents $150 capital. If the ferry line consists of three boats 
worth $40 each, Cornelius can now buy out the boats, or buy new 
boats and start an opposition line. If the line usually carries 
thirty passengers a day at one shilling each (old New York money) 
and earns freights to the amount of $10 a day, here are $13.75 to 
be got by hiring two men and working himself, after buying the 
three boats for $120. In short, he suddenly rises from wages of 
$1 a day to a profit of $10.75 a day, while he continues, by his 
work in rowing one of the boats, to earn also $1 a day. 

But he staiids a chance of losing his $120, for something may 
happen by which travel may cease, or the boats may be wrecked, 
sunk, or burned. This chance he ventures. Hence his increase 
of income is due to three qualities — abstinence, sagacity, and 
courage. Having now an income of $11.75 a day, if he continues 



218 ECONOMIC PIIILOSOPIIY. 

to live at fifty cents a day he can in fifty days buy a sailing sloop 
which will cost |500, and increase his earnings to $20 a day, while 
lessening his labor and expenditure. In every step of tiiis process 
he benefits tlie labor that needs employment and the people that 
need transportation. The people of Staten Island get a public 
ferry established, greatly f;o their profit, without being at any 
expense in its establishment. If it proves to be a mistake of 
judgment, and a losing affair, the loss all falls on Cornelius. 
This is a saving and gain to society in the first instance, as com- 
l^ared with the cost of imposing a general tax whereby to start 
the ferry — a project so doubtful that it would perhaps be a more 
costly labor to get the people to vote for it, than to start it at 
private risk and run it at private cost. Hence, alike in the period 
when hoarded capital assumes the responsibility and risk of 
inaugurating new enterprises, steering industry, and employing 
labor, the public at large make a great saving in being relieved 
of all risk and cost in a matter which will inure to their great 
advantage. 

The qualities of character which fit a man to employ labor and 
direct industry are : 

(1) Parsimony. — This disposes him to devote the minimum 
of his means to personal consumption of himself and household, 
and the maximum to reproductive purposes. This is what society 
itself at this stage most needs, since it wants reproductive industry 
to go on. most actively. 

(2) A Keen Perception of Values. — This enables him always 
to so adjust his purchases of raw materials and of labor, and 
his observations concerning the tendencies of demand or the 
future wants of his customers, that he will buy and produce for 
less than he can sell. Only thus can he achieve that expansion 
in his capital, by which to expand his purchases of materials and 
labor and the magnitude of his sales. Hence the community are 
interested that every attempted producer of wealth should have 
a keen sense of value. Without it his business can not obtain 
that magnitude which is essential to cheapness. 

Finally, financial courage, or the will to let money go when 
money is to be made by risking it, is required. Without this, 
one's capital will slowly consume in expensive timidity and unpro- 
ductive idleness, while one is waiting for those ideal opportunities 
to arise in which the profits are large, the returns certain, and 
there is no risk of loss. Such chances never come. 

Producing on a large scale promotes production on a cheap 



LARGENESS AND CHEAPNESS. 219 

scale ; (a) by the sub-division of labor it makes possible ; (b) by the 
substitution of machinery for manual labor which usually accom- 
panies it ; (c) by getting control of a larger demand for consump- 
tion ; (d) by the substitution of credits for cash in its expenditures ; 
(e) by passing securely through reverses which would wreck 
industries conducted on small capitals ; (f ) by paying wages of 
superintendence to but few persons in proportion to the whole 
number employed ; (g) by the skill and delicacy of judgment con- 
cerning questions of profit which is developed by a long habit of 
doing only profitable things.* 

*Example A.— Effect of large cajntals to induce subdimsion oflabm\ — Adam Smith be- 
gan his great work (" Wealth of Nations," BIj. i. Ch. i.) by pointing out that while one 
man, working alone, might not be able to make more than one pin a day, certainly not 
twenty pins, ten men, each making a particular part, one drawing out the wire, another 
straightening it, a third cutting it, a fourth pointing it (or rather, pointing numbers 
of pins at once), a fifth grinding it at the top for receiving the head, the other three 
making the head by as many distinct processes, and so on, the whole ten could make 
about 48,000 pins a day. Each one would thereby increase his make, by mere sub-divi- 
sion of functions, from one or twenty pins to 4,800 pins. 

Many persons can earn their own living by rag-picking, street-sweeping, chimney- 
sweeping, and other peculiar occupations, very simple, and requiring no skill, strength, 
or endurance, in a community where there is a great division of labor, who, if required 
to live by farming, hunting, or systematic work at a trade, would die. Some writers 
appear to so mistake the fact that very helpless and inefiicient workers crowd into the 
great cities and live there as to infer that, because such are only found in the great 
cities, therefore there is something in the construction or management of society in 
great cities which makes them helpless and inefiicient, whereas the fact is, the sub- 
division of employments in great cities reduces them down to processes so simple that 
the simplest minds and weakest bodies are there able to find something which they can 
do. Hence Henry George says : 

" To see human beings in the most abject, the most helpless and hopeless condition, 
yea must go, not to the unfenced prairies, and the log cabins of new clearings in the 
backwoods, where man, single-handed, is commencing the struggle with nature, and 
land is yet worth nothing, but to the great cities where the ownership of a little patch 
of land is a fortune." 

Conceding this to be true, it only indicates that thousands of people can get a living 
of some kind, where there is great subdivision of labor, who would perish if presented 
with a quarter section of land and obliged to get a living from it. 

Example B.—Subftitution of machinery for manual labor brought about by large capi- 
tals. — Mr. Moody* computes that on the Grandin farm in Dakota wheat worth 70 cents 
per bushel is produced at a total cost in all ways of only 16 cents per bushel, leaviug a 
net profit on the first jear of farming of 54 cents per bushel, or over 300 percent. Mr. 
Edward Atkinsont says: "If we convert the work done in the direction of machinery 
upon the great bonanza farms of far Dakota into tlie yearly work of a given number of 
men, we find that the equivalent in a fair season, on the best farms, of one man's work 
for 300 working days in one year, is 5,500 bushels of wheat. Setting aside an ample 
quantity for seed, this wheat can be moved to Minneapolis, where it is converted into 
1,000 barrels of flour, and the flour is moved to the city of New York. By similar 
processes of conversion of the work of milling and barreling into the labor of one man 
* "Land and Labor in United States," by Wm. Godwin Moody, p. 53, 
+ "The Kate of Wages," p. 75, 



220 ECONOMIC PHILOSOPHY. 

88. Society's Gain Tby Liarge Accumulations. —Large 

capitals draw lower rates of interest than small, notwithstanding 
that equivalent quantities of capital in them often, and except in 

for a year, we find that the work of milling and putting into barrels 1,000 barrels of 
flour is the equivalent of one man's work for one year. By a computation based upon 
the trains moving on the New York Central Railroad, and the number of men engaged 
in the work, we find that 120 tons, the mean between 4 500 bushels of wheat and 1,000 
barrels of flour, can be moved 1,7C0 to 2,000 miles under the direction of one man, 
working eighteen months, equal to one and one-half men working one year. When 
this wheat reaches New York City, and comes into poFsession of a great baker, who 
has established the manufacture of bread on a large scale, and who sells the best of 
bread to the working people of New York at the lowest possible price, we find that 
1,000 barrels of flour can be converted into bread and sold over the country by the work 
of three persons for one year. Let us add to the sis and a half men already named the 
work of another man six months, or half a man one year, to keep the machinery in 
repair, and our modern miracle is that seven men suflice to give 1,0^^0 persons all the 
bread they customarily consume in a year. If to these we add three for the work of 
providing fuel and other materials to the railroad and to the baker, our final result is that 
ten men working one yenr serve bread to 1,000." 

'■Again, iron lies at the foundation of all arts. At an average of 200 lbs. per head in 
the United States, the largest consumption of iron of any nation, we yet find that the 
equivalent of one man's work for a year, divided between the coal mine, the iron mine, 
and the iron furnace, suflices for the supply of 500 persons. One operator in the cotton 
factory makes cloth for 200, in the woolen factory for 300 ; one modern cobbler (who 
is any thing but a cobbler), working in a boot and shoe factory, furnishes 1,000 men, or 
more than 1,000 women, with all the boots and shoes they require in a year. So it goes 
on, and the more effective the capital the higher the v/ages, the lower the cost the 
more ample the supply." 

Of course, if the general cost of producing wheat throughout the world could be 
brought down to the low figures of production in Dakota, wheat would soon fall every- 
where to about twenty cents a bushel, and bread to one cent a loaf. 

In printing, seventy -five men can do as much work on a modern printing press as ten 
thousand men could have done with the hand-presses in use in the beginning of the 
century. In building, the planing machine does the work of twenty men. In boot and 
shoe making, one man fifty years ago would make two hundred pairs of boots and shoes 
in a year — now three hundred pairs. One woman will sew on a machine as mtich as 
twelve with the needle. 

Example C. — 0/the use of large capitals in controlling a larger demand for consump- 
tion. — This is conspicuously seen in the operations of competition between rival rail- 
ways and great manufacttiring companies, and underlies their tendencies toward 
consolidation. Mr. Vauderbilt purchased the Harlem Road when its shares were worth 
from eleven to nineteen cents only, and when it was almost without business. He then 
offered to carry ail the traific coming into Albany over the New York Central for one 
fifth of what had previously been paid to the Hudson River Road for the same service 
provided the Central would make a like discrimination in favor of the traffic coming 
to Albany over the Harlem against that coming by the Hudson River. The induce- 
ment was too great to be resisted. In a few days Hudson River Railroad stock fell so 
enormously, and Harlem rose so rapidly, that Vanderbilt was seen to be master of the 
three roads by owning one. He soon passed into legal control of all the three. By 
massing his capital, so as to effectively control the largest possible demaudfor the work 
of his road, he revolutionized the railway business, and, applying the same tactics to the 
other roads, compelled their virtual consolidation with the New York Central, thus 
converting railways from single roads into systems. This made him the richest man 
living, and did much to improve railway transportation and cheaper freights. 



DECLINE OF PROFITS. 221 

farming- usually, effect a larger production of wealth ; and thus 
the community makes an economy out of large capitals which it 
could not effect with the same quantity of capital subdivided 

The rates at which railway freiglirs were clieapened, largely through the increase of 
traffic and cheapness of service brought about by this system of concentrated control, 
are shown by the following table,prepared by the Hon. Joseph Nimmo, Jr., late Chief of 
the Bureau of Statistics : 

By lake By lake By By lake By lake By 

Years. and and all Years. and and all 

canal. rail. rail. canal. rail- rail. 

Cents. Cents. Cents. Cents. Cents. Cents. 

1868 24 54 29.0 43.6 1877 11.34 15.8 20.3 

1869 23.12 25.0 35.1 1878 9.15 11.4 17.7 

1870 17.10 23.0 33.3 1879 11.60 13.3 17.3 

1871 20.24 25 31.0 1880 13.27 15.7 19,7 

1872 24.50 28.0 33.5 1881 8.19 10.4 14.4 

1873 19.19 26.9 33.2 1883 7.89 10,9 14.6 

1874 14.10 16.9 28.7 1883 8.10 11.5 10.5 

1875 11.43 14.6 24.1 1884, Jan. to Sept. 6.00 9.75 13.0 

1876 9.58 11.8 16.5 Q,uotatious are wanting for 1885. 

It is shown by this table that since 1868, when the statistics commence, the freight on 
wheat from Chicago to New York has declined to one-fourth its original value in six- 
teen years. 

Example Z>.— The subjugation of the Confederate rebellion by the Union arms was 
financially, perhaps, the most remarkable triumph ever witnessed of the substitution of 
credit for cash values. At the outset the Federal Government had no money, and not 
more than $.50,000,000 in gold, all told, exifted in the country, and hardiy any of this 
was in the hands of the government. Secretary Chase met the bankers of New York, 
by appointment, to obiain a loan. They offered him $50,000,000 at a high rate, and 
said "that must be their ultimatum." " Gentlemen," said Mr. Cha?e, "it is for the 
government of the United States to propose ultimatums. Since you can not lend me 
the money on which to run the government, I will compel you to run your banks on my 
money, if I have to issue government notes until it takes a bushel of notes to buy one 
breakfast." The war was fought through almost wholly without any other than 
credit money, the only tie connecting it with gold being that itwas, fora time, fundable 
into gold-interest paying bonds', the gold interest on which was secured by collecting 
the customs duties in gold only. For every other use in the United States, except that 
of paying customs duties and interest on the public debt, tte credit of the government 
was substituted. This substitution of government credit, in the form of greenback 
notes and bonds, for the previous attempt to use gold, became in reality, since very 
little gold had been in fact used, in substitution of public for individual credit, or of 
government notes for book accounts, which had the effect of bringing business over 
from a private credit basis to a private cash basis, through the use of government 
credit, as the equivalent of cash, in all domestic trade. 

Goods which had previously been sold on long time, i.e., on the buyer's promise to 
pay in 60 or 90 days, were now sold for government notes. These became so abundant 
and so cheap, relatively to gold, that debts which prior to their issue could only be 
paid with $100 in gold could now be paid in notes, t*^ c gold value of which was only 
S70, $60, or, at least for a few weeks, $45. As every body who had money preferred 
something else to it, cash payments were i)romptly made on every side, and prompt- 
ness in meeting liabilities had almos^t ceased to be a virtue. The bankruptcy of the 
government made every body flush. The business failures shrunk in the United 
States from 6,993 in 1801 to 495 in 1805, from a total liabilities involved in IStll of 
of $307,310,001 to a total liabilities involved in 1803 of only $7,899,000. Crimes against 
person and property fell off in like proportion, jails were empty, and the courts dc- 



222 ECONOMIC PHILOSOPHY. 

among many holders. A newsboj' with fifty cents capital will 
buy fifty papers at one cent and sell them for two cents each in a 
day. Although he combines a good deal of labor of running and 
shouting, yet no part of the fifty cents is wages of labor, because 
no person employs him, and he places his whole capital at risk. 
If he should happen to lose his i^apers, or they should be destroyed, 
or remain unsold until the next day, he would ha.ve lost his entire 
capital. Hence no part of his gain is wages, but all of it is 
profit ; for profit may, as well as wages, be an inducement to labor. 
The profit on the fifty cents is 100 per cent, a day. 
When he has made a dollar he can employ a comrade who has 
no fifty cents to help him, giving him half the profits; and at the 
end of the next day, if successful, he will have seventy-five cents 
as the gain of that day, fifty cents on his own work, and twenty- 
five cents on that of his conn-ade. His return on his second fifty 
cents is only 50 per cent, a day. When he has $10 his income 
would rise to $2. 50, if he could get 25 per cent, a day on the 
whole, and he Avould be a bright financier if he could do better ; 
for the quantity of leg-woi-k and shouting which he can do in 
connection with each dollar of the ten is only one-tenth as much 
' as he could do for the first dollar. As capital increases, the amount 
of labor the owner can give to a given sum of it declines, and 
therewith his profit declines. When the capital rises to $100, the 
newsboy or peddler of any kind who can make it earn him $10, 
or 10 per cent., a day would be a genius. When it becomes 
$2,000, and the newsboy has graduated into a merchant selling 
books or groceries, he could not hope, still with the utmost aid of 
his own labor and that of two assistants, to come out of the year 
with a gross profit of more than $2,000, so that the rate per cent. 

eerted. Shortly after the close of the war the former average of failures and crime 
again returned. 

Thesubstitutionof credit formoncy, which the nation as a whole then underwent, 
has sometimes been imitated on a small scale by private firms and corporatioBS, but 
the stringency in means, which usually suggests it, is not favorable to success, except 
in the cases of such notable trading firms as the Hudson's Bay Company, the Alaska Fur 
Company, the East India Company, whose promises or accepted orders would circulate 
among large populations in lieu of money. 

Example E. — Oftheuse of large capitals to pass securelij through reverses which ivoitld ' 
wreck the same industries if owned by small capitals.-— Ji\ the shrinkage of railway stocks 
in the United States 1882-4, shares whicli had been worth $0,000,000,000 in 1881 became 
worth less by |2,000,000,000 in 1884. All this loss occurred without the suspension of 
traffic on any road tr any interruption to business. Had all the roads been owned by 
small stockholders the ruin to individuals would have been uldesprt'ad and the suffer- 
ing very great, as one will readily see by assuuiing a similar shrmkage in the values of 
fjii ins or other private properties. 



GREAT CAPITALH AND SMALL PROFITS . 223 

has declined from 1 per cent, a day to 100 per cent, per annum. 
With $100, 000 he is fortunate if he makes $10,000 by safe and 
regular business, without speculative investments, a still further 
decline of nine-tenths. When a man's fortune rises over a million 
he begins to invest at 5, 4, and 3 per cent., because he can there- 
by put his money where it needs no watching, and he is sure of 
his interest. 

It is, therefore, a law of economics that the rate of interest, at 
which capital lends its services to society, declines as the volume 
of capital held by one owner increases. Large capitals also serve 
the public more cheaply than small ones. A merchant, having 
$1,000,000 capital, can and will sell goods cheaper than one having 
$10,000. A bank having a very large loanable capital can, and 
will, lend cheaper. The I'ailways, representing $50,000,000 capital, 
each, in the Northern States, carry passengers at two cents per 
mile and freight at one-third to one-half a cent per ton per mile. 
Southern and frontier railways, having smaller caj)itals and less 
traffic, charge twice or thrice higher rates. The large factories 
manufacture cheaper than the small. Instance the great cheapen- 
ing of goods everywhere, when the system of spinning and weav- 
ing in every house merged into the large factory system. Even 
the large landlords rent cheaper. Under the great landlords of 
England rents are far lower than in the United States or France, 
and, in the city of New York, those who can rent of the Astors or 
Trinity Church are estimated to fare about 15 per cent, better than 
those who rent of the small landlords. 

The concentration of productive capitals, into few hands, pro- 
motes the most far-reaching and equal diffusion of enjoyable prod- 
ucts or commodities for consumj)tion, over the widest area, to 
the greatest number, and in the shortest time. Reproductive 
capital, not being itself enjoyable v^ealth, can be used for no other 
purpose than to forward enjoyable wealth to its consumer. 

The banker does this when he cashes the check of a traveler 
making the tour of Europe, or a merchant buying goods. The 
merchant does the same when he sells goods and buys again. 
The manufacturer does this vs^hen he weaves carpets. Since all 
these men can, as we have seen, and do render this service more 
cheaply, the larger the capitals they have to work Avitli, it follows 
that consumers must secure an increase of enjoyable wealth, by 
reason of the existence of the large concentrations of caj)ital, 
which they could not get if those concentrations of capital were 
smaller. He gets his goods carried four times as far, for the 



224 ECONOMIC PHILOSOPnT. 

same sum, by reason of these concentrations of capital and 
control,* 

89. Liarge Capitals Lessen Consumptiou. — The control 
or custody of a large amount of reproductive capital into the 
liands of one owner inci^eases very little, if at all, the quantity of 
enjoyable wealth he can, or will, consume. On the contrary, it 
may in many ways diminish his capacity to consume wealth. t 



* That the actual distribution of all enjoyable and consumable commodities is af- 
fected with marvelous equality amont; all the members of society is shown, by com- 
paring the total amount produced in the country with the amount each one gets. Mr. 
Edward Atkinson* l^ays "that the total value of the annual product of all industries in 
the United States by the census of 1880, including the part tnat is sold and the domes- 
tic consumption upon farms and in families, would not exceed $10,000,000,000 in the 
cen>us year at the retail prices for final consumption." He then says: " If the census esti- 
mate be divided by the population of substantially 50,000,000 people, we reach $160 to 
$170per year as the sum representing the average annual product for each person, or a 
fraction less than forty-four to forty-seven cents per day for 365 days." 

Mr. Atkinson believes from other data the annual product is flfty-flve cents per capita, 
or a little under $200 for each person . 

The census, however, it must be remembered, only enumerates principal agricultural 
products and principal manufacturing products. In the matter of meats it fails to 
enumerate the annual growth and slaughter of meat for food, confining itself to the 
meats which pass through the the packing houses, viz . , $303,000,000. It enumerates 
the total quantity of food-animals existing, but not the annual increase or consump- 
tion, not any of the meats killed by our 76,241 butchers throughout the country, nor 
by farmers on farms, nor the poultry, game, geese, ducks, etc., which are killed and 
consumed at home. These and other omissions in the census, amount, in the judgment 
of the present writer, to an error of 50 per cent, in the entire computation; for it is not 
probable that the meat-bill of the American people is less than $1 per head per week, 
or ten times the sum named in the census. If so, this error alone would bring the an- 
nual production up to $3,700,000,000 more than that stated by Mr. Atkinson. Whatever 
the total production may be, the whole force of reproductive capital is expended in 
speeding it to the point of greatest demand. Very little actual loss or waste occurs ex- 
cept in the unsaved sewage of the large cities. As Mr. Atkinson says, "if no more is 
produced no more can be had." 

t The hoarders of small sums of money, say from $200 to $2,000, have in most coun- 
tries so great a distrust of banks that they prefer to keep their hoard in go'd, buried in 
the ground, or locked up in chests, or, as the phrase goes, in old stockings. This 
operates as a withdrawal of the hoard from circulation, and, in France particularly, the 
amount so withdrawn is an important and nearly constant quantity. As a rule, the 
large capitalists withdraw nothing from actual use by society in the form of a treasured 
hoard. Being well acquainted with banks, they deposit their entire hoard with them, 
and thus place it where, through the loans made by the banks, it will have all the cir- 
culation that can be given to it. Their stocks, bonds, shares, and other evidences of 
<1ebt are not actual reproductive capital, but only claims upon reproductive capital. 
The railway shares represent engines, cars, tracks, and depots, in actual use by the em- 
ployes of the company in serving the public. So of their shares in factories or other 
stock concerns. The rich, therefore, have no hoard, and withdraw a smaller idle 
capital from active use than the poor. 

* " The Distribntion of Products," p. 70. 



LIMITS ON C0NSU3IPTI0N. 225 

The poor usually have more healthy labor and less harassing' 
care than the rich, and physical labor has a better effect pn the 
health, ordinaiily, than mental solicitude. The plain, substan- 
tial food of the toiling classes promotes digestion better than tliat 
of the rich. As the poor man is not ashamed to select an expert 
cook for his wife, while the rich man would usually marry one 
who knew little about cooking, the poor man, at least throughout 
the United States, is rather more likely to eat well-cooked food 
than the rich. He therefore eats better, sleeps better, digests bet- 
ter, and consumes more food iier day at the average, than one 
who has more money to buy food with. Nature has so limited 
the capacity of all men to consume wealth that it is difficult to 
pass its barriers. No man can eat more than three meals a day, 
and this all poor men get, with exceptions that are as rare as rail- 
road accidents. No man can wear at once more than that limited 
supply of clothing which all poor men Avear. If he buys more, 
he must, sooner or later, give it away unworn. 

No man can sleep in more than one room at a time. If lie 
build an extensive palace, he must either leave it vacant and 
gloomy, or he must fill it with his guests and friends, or his ser- 
vants. If with the first, he makes his palace a temple of hospi- 
tality and sociability rather than a private residence, and the 
maintainance of such a palace becomes a most rapid and effective 
means of dispersing his wealth. If with the second, his palace 
becomes a comfortable asylum for the many poor — who will gladly 
render him the slight services they may be able to, in return for 
home — and a means of ostentatious, though soixiewhat lonesome, 
splendor to him. 

Adam Smith regards an expenditure upon a costly retinue of 
servants and retainers as at all times an unprofitable expenditui'e. 
But it may be doubted if, all things considered, those who main- 
tain the servants may not ordinarily be better judges than a dis- 
tant observer, both of the cost of maintaining them and the 
profit. In the feudal and old baronial organization of society, in 
the patrician families of the Romans, and on the Southern slave 
plantations, there was a system of maintaining many dependants, 
each of whom would seem, to an observex', to do very little toward 
the common support. Yet this w^as a system, in effect, of indus- 
trial co-operation and reciprocal exchange, organized on the basis 
of rank instead of capital. But, where rank and authority have 
the effect to cause each to do toward the common supx^ort the 
thing he is best able to do, the effect may. be as productive ecou- 



226 ECONOMIC PHILOSOPHY. 

omically, and somewhat more stable, dignified, and honorable! 
socially, than if the designed object of the general employer were 
to make money, and the sole motive of the employe were wages. 
Many of the Roman patricians, Southern slave-holders, and feu- 
dal barons contrived, notwithstanding the large force of servants 
they had to feed, to grow rich out of the profit made from their 
aggregated labor. If in patricianism the command of the supe- 
rior insures the obedience of the inferior, it becomes a substitute 
for wages. Those who are supposed to keep a large number of 
servants, for display, will usually plead that they can not accom- 
plish the results they desire, with fewer. There may be an econ- 
omy of time, an economy of patience, or an economy of social 
prestige and respect, connected with living at a given rate of ex- 
penditure, which may make it j)ay the person who indulges in it, 
better, pecuniarily, than the more stringent mode of living which 
a parsimonious adviser would recommend. " There be that scat- 
tereth and yet increaseth, and there be that withholdeth and yet 
it tendeth to poverty." Parsimony is not always economy, and 
costly expenditure is not necessarily waste. 

If a Stewart or Vanderbilt expend $1,000,000 on a residence 
which will continue to hold at the average, including family, ser- 
vants, and guests, thirty persons, every year for 500 years, the 
consumption of wealth incurr-ed in its cost when distinbuted over 
all persons accommodated is reduced to the very moderate sum of 
$66 per year, or but little over $1 per week to each person, which 
is as low a rate as newsboys can hire their lodgings for by the 
night. So, when a poor sewing-girl purchases a piece of cheap 
jewelry for a dollar, which in one year she will throw away as 
worthless, the amount of wealth stored by her in the commodity 
is very small, relatively to the amount stored in a diamond, for 
which a duchess pays a thousand guineas. But the amount of 
wealth consumed by the sewing girl is the greater, since the 
diamond, unless burned up, will incur no waste of wealth in a 
thousand years, while the bauble wastes its value in one year. 
The greater permanence, durability, and fixity in the purchases 
and possessions of the rich, makes them as a class, therefore, the 
means of consuming little, if any, more per capita., and possi- 
bly less, than the poor who have the custody of very little, but 
actually consume a large part of what comes into their cus- 
tody. 

90. Effect of liarge Capitals on Kates of Wages. — What 
effect does the concentration of capitals, so as to bring the control 



NO CAPITALISTS, NO WAGES. 227 

of large masses into one hand, have upon the rates of wages of 
labor ? 

Reproductive capital may be used to obtain a profit, either in 
the employment of labor and sale of its products, or in erecting 
and letting buildings, for the shelter of so many of the laboring 
class as must rent homes, or in effecting exchanges of tlie prod- 
ucts of labor. So far as it is used to make a profit by directing 
and employing labor, its concentration in large masses increases 
the fund from which labor is to be paid, and increases the steadi- 
ness and certainty of the demand for labor. 

In all countries where one man is worth about as much as an- 
other, labor does not admit of being organized and made efi^ective 
for large undertakings, society is nomadic and isolated, distrust, 
suspicion, falsehood, and deception, reign in place of confidence 
and co-operation, the trader and usurer borders on the robber, 
and the rate of production is low. Such are Arabia, Tartary, 
Negroland, and all tribal life. Hence, wages must be proportion- 
ately low, since they depend on rate of production. 

In India the large native caijitalists were effectively stripped 
of their wealth under the rule of Clive and Hastings, in the 
manner set forth by Burke and Sheridan on the great occasion of 
Warren Hastings' trial. But since India was thus stripped of 
her capitalists by foreign oppression, rates of wages have been 
lower there than in any other country in the world, being for a 
good worker, in provinces distant from railroads and large towns, 
as low as $10 per year, or 4 to 10 cents per day. If India could 
be filled with capitalists wages would go up. Mr. Brassey* says 
of the Indian laborers : "In many districts black bread and 
water are the only food of the people, and the cost of this meager 
dietary varies from 5s. to 6s. per month" ($1.25 to $1.50). In 
Eussia rates of wages are lowest where the people rely for a sub- 
sistence on the communal ownership of the land. 

The payment of the wages of labor with steadiness, perma- 
nence, and amplitude being the chief function of capital, and 
payment of wages being the function for performing which cap- 
ital is the implement, the larger and better handled the imple- 
ment the more perfectly it must perform its function. 

* In America, during our Colonial period, though Adam Smith speaks of rates of 
wages as higher than in England, they were but a third or fourth of their present rates. 
Working men and women would think it no improper tiling, if possessed of a pair of 
shoes, to carry the shoes in their hands on Sunday until they api)roached the church 
door, there put them on and wear them during the service, remove them again on going 
out. and walk home barefoot to save the shoes. 



228 ECONOMIC PHILOSOPHY. 

Payment of wages can never cease to be, in eflPect, a division be- 
tween the entire capital invested in an enterprise, and the entire 
labor employed by it, of the fund which remains out of the price 
received for the joint product of tlie two co-worlcers, after paying 
the cost of raw materials. It is, therefore, in a permanent sense, 
a division between partners, the whole capital being one i3artner, 
and the whole labor another. Carey, Bastiat, and Atkinson 
have agreed upon the formula which is true when applied to the 
history of any one enterprise — a cotton factory, for instance — 
that as the capital and labor invested in a permanent, successful, 
and profitable enterprise go on increasing ' ' the absolute share of 
the value of the annual product falling to capital increases, but 
its relative share diminishes, while the share that falls to labor 
increases, both absolutely and relatively." 

When the aggregate of enteriDrises in a prosperous country, or 
indeed, perhaps, in an unprosperous one, though of this we have 
fewer opportunities to observe, is taken into view, the principle 
of division employed is a perpetually recurring return toward 
that of equal division between the aggregated capital and aggre- 
gated labor employed. 

91. Constancy of Returns. — Capital tends, on the first in- 
auguration of new enterprises and the first introduction of labor- 
saving machinery, to get, as profits, a return graduated accord- 
ing to the cost of attaining the same result by manual labor, by 
the previous processes in use, or by the actual competition that 
exists. It is not until many capitalists compete in producing the 
same thing that it is brought down to the standard of interest on 
the capital required ; and, anterior to such reduction, it gets as 
profit a continually reducing sum based on the value of the 
wages saved, or the rate at which the same service could be ren- 
dered by hand labor. Also, in carrying on enterprises under more 
favorable conditions, capital gets at first, as profit, the difi'erence be- 
tween cost of production under anterior conditions an d under these 
new ones. This is shown in the high rate of profit obtained by 
the first great bonanza farmers of Dakota, which was upwards of 
300 per cent., while farmers might be found in the older States 
whose profits had declined to even 3 per cent. So, on the first 
introduction of a new railroad, the road will charge the rate 
which will secure the freight as against the overland team, thus 
obtaining for steam carriage only a trifle less per ton per mile 
than would be charged for carriage by animal power. 

It is this choice of new fields for the investment of capital, 



PROFITS MIGRATE. 229 

which keeps capital migrating, from old investments to new ones, 
and hence retiring from points where rates of return have de- 
clined, in the manner pointed out by the law of declining returns 
contended for by Carey, Bastiat, and Atkinson, and passing 
into new forms of entei'prise where it will either be sunk alto- 
gether, or largely, or will reap a much larger profit. The law, 
therefore, must not be interpreted to mean that the aggregate of 
capital in the world reaps a declining rate of profit. Such a con- 
dition of things would lead to a final paralysis of industry. It is 
essential to high wages that there shall somewhere be industries 
in which, and points at which, capital and enterprise are reaping 
high profits. 

It is only by the division of a high rate of diiTerence, between 
cost of production and price of product, that high wages can be 
maintained, and as this division will be made by capital, it will 
make sure first of its own high profits. Hence, high wages can 
not be permanently had, except as high profits precede and cause 
them. 

92. What Makes Hig-li Profits ?— High rates of profit are 
due to the advance of a large body of consumers to a higher 
standard of living, at a lower cost of effort and exertion on their 
part, either through an expansion in the area, or cheapening in 
the processes, of j)i'oduction, or an increasing perfection in the 
distribution of wealth. 

This may be due to discovery of new and more fertile areas for 
tillage, of new plants or animals for food, of new processes in 
manufacture or transportation, of new sources of money, new 
modes of exchange, and even of new institutions and law^s better 
adapted to secure a large development of industry. It may be 
due also to new forms of government, great wars, or great migra- 
tions of populations. Hence high rates of profit are a mark, or 
sign, that industry and progress are making a successful advent 
into new fields or modes of industry. They can not be expected to 
continue, in any industry, after it has become of long standing, 
except as it may be made a new industry, by new processes, new 
conditions, or a new demand. Nor is the earth, by past advance- 
ment in art, or by increase of population, approaching the period 
when large or high profits can no longer be made in industries of 
any kind, or when migrations of populations to new regions, and 
transitions of old populations to new industries, can not take 
place. Such a period is, practically, as far removed as ever. The 
world's entire population, estimated at 1,400,000,000 persons, 



230 ECONOMIC PHILOSOPHY. 

could stand on an area tea. miles square, and could be fed on the 
products of an area much less than that of the United States. 
Less than one-twentieth of the land of the United States capable 
of producing wheat has been improved. 

Although the United States heads the list of agricultural and 
pastoral producers with an annual valuation of $3,020,000,000, 
Germany, Avhich is not so large as Texas, yields in farm and pas- 
ture products more than two-thirds as much in value as the whole 
United States, viz., $2,280,000,000. France yields $2,220,000,000. 
Russia, with her immense superficies and 90,000,000 inhabitants, 
produces of food products only $2,545,000,000, which is barely 
twice as much as is produced by less than half her population in 
Great Br«itain, viz., $1,280,000,000, though Great Britain has an 
area about equal only to the two States of Illinois and Indiana. 

The whole present cotton crop of the world could be produced 
on one-fourteenth of the soil of Texas, No man yet knows the 
capacity of an acre of land for pi'oduction. Although China is 
reported to be overcrowded, the absence of beasts of burden and 
means of transportation leaves vast and fertile steppes in her in- 
terior without habitation or tillage. Many centuries must pass 
before the question whether ' ' population can press on means of 
subsistence "* will become a practical one. 

Indeed, it seems to be rendered untenable, even as a hypothesis, 
by the law that the lower the organization the greater the 
fecundity, or capacity for reproducing its species. As the lower 
organizations constitute the food of the higher, and possess the 
greater fecundity, it is not possible to conceive of the less prolific 
outrunning the means of subsistence furnished by the more 
fruitful. 

93. Malthus' So-called Law.— Prof. Bonamy Price, of Ox- 
ford, speaking of the Malthusian law, so called, says : ' ' What is 
the essence of this theory but the well known fact that human 
beings, like all other animals, have a power of multiplying faster 
than their food? " Is this a well known fact ? 



* A mere numerical calculation of the rate at which a person's descendants may mul- 
tiply, in successive generations of posterity, is of no more value to prove that the world 
will at any future date be more crowded than it now is, than a like calculation of the 
rate at whicu the same person's ancestors multiply as we go backvrard, would be to 
prove that the earth must formerly have held a greater population than now. Each ex- 
isting inhabitant of the earth has but to go back a few centuries to find that his an- 
cestors number by millions. Such calculations omit the crossings, or the degree in 
which the descendants, and ancestors, of each unit, count again and again as descend- 
ants and ancestors of the others. 



MAN AND HIS FOOD. 



231 



Since, as human beings are the food of all other animals, and 
all other animals are, or may be, the food of human beings, and 
as the ppwer of multiplying faster than their food pertains both 
to human beings and to all other animals, it follows that Prof. 
Price has affirmed both that human beings have a power of 
multiplying greater than that of other animals, and that other 
animals have a power of multiplying greater than that of human 
beings. Each being alternately the food of the other, if each 
multiplies faster than its food, each must multiply faster than the 
other. The greater multiplying power of food, compared with 
that of man, may be seen in the case of a married couple and 
a grain of wheat. In the colonial period of the United States, it 
is said that, one woman has produced as many as twenty -five 
children, though at present the production of from eleven to 
fifteen is extraordinary. Calling the age of man seventy-five years, 
a birth of twenty-five childi'en to two parents would be thirty-three 
per cent, per annum to the two, or sixteen and a half per cent, 
to each unit of population. The highest actual increase in 
the United States is, with immigration, three per cent., and 
without immigration two and a half per cent, per annum. 
American wheat-growers sow 50,000,000 bushels of wheat an- 
nually to produce 500,000,000 bushels of wheat, being only 
ten-fold. But this is sixty times the highest alleged rate of 
increase in the human species in our colonial period, and is 300 
times the present actual rate of increase. But this is far short of 
the potentiality of wheat under higher processes of production. 

Major Hallett, of Brighton, England, in 1857-61, by planting 
wheat in rows a foot aj)art, and selecting best gi^ains from best 
ears, and best ears from most abundant stools, attained the follow- 
ing I'esult, beginning with best grains selected from best ears, 
four and three-eighths inches long, and containing, forty-seven 
grains per ear, which he found in a common field : — 









Containing 


No. of Ears on 


Year. 


Ears Selected. 


Height, Inches. 


Grains. 


Finest Stool. 


18.^8 


Finest Ears 


6 14 


ro 


10 


1850 


" " 


v« 


91 


~3 


3860 


Ears Imperfect from Wet 
Season 




u 


39 


1861 


Finest Ears 


^Vi 


123 


53 



In an ordinary wheat field, thickly sown, only one and a half 
ears grow from one stool. Here is an increase in fecundity from 
one ear having forty-seven grains (forty-seven fold) to fifty-two 



232 ECONOMIC PHILOSOPHY. 

ears, carrying in the best ear 123 grams, or 6,396 fold per annum. 
Such a hypothetical rate of increase would produce in the second 
year from a grain of wheat 40,908,816 grains, or seventy bushels, 
supposing the grains to retain only their previous size under im- 
proved planting. In fact, however, Major Hallett's processes very 
largely increased the size of the grain, causing 460.000 grains to 
make a bushel, instead of 700,000. Adding this quality, the pos- 
sible productive power of a single grain of wheat, in two years, 
would be about 130 bushels. 

And yet the fecundity of wheat is small compared with that of 
maize or potatoes. A single potato, planted on newly cleared 
ground in Northern New York, on which, in clearing, the 
resinous forest trees have been burned to ashes, will produce 
seventy-five potatoes in a single hill, one bushel in two hills, or 
500 bushels per acre, and if cut up so that each " eye " becomes 
a hill will produce pi-obably several times as many. In Dakota 
the small number of potatoes required to plant one acre have pro- 
duced 1,000 bushels. 

The fruitfulness of the lower animals is as much greater than 
that of man, as that of plants is greater than that of the lower 
animals. 

Beside the fact, that the lower organizations and forms of life 
are more prolific than the upper, other causes tend to increase the 
means of support for man, as population increases. The utilities of 
things increase with their use, human progress being an evolution 
from the less perfect to more perfect means of production. Things, at 
first noxious, come to have great value. New varieties of food and 
medicine become known. A continually increasing regularity of 
diet promotes health, while a wider diversity of diet increases the 
nerve force and promotes intellectual labor. Beginning at the 
zero point where, perhaps, man first attempted to outwit the 
gorilla by sharpening his long club into a spear, and we must 
perceive that, to this savage, nothing has utility — still less value. 
The forests are useless, for he can not fell or hew the trees for want 
of the ax, saw, chisel, and aug(;r. Iron is useless, for he can not 
distinguish it from the red clay, and he knows nothing of fire, 
except as he trembles before it in the volcano, or worships its 
counterfeit in the lightning. Glass does not exist, nor does 
nature furnish any model which would suggest it. The beasts 
are all ai'med, while man is Jiot. Even the mountain goat and 
the ram master him, while the wild boar is a terror. He flees for 
his life from the very patrimony which his children ai'e to inherit 



FEW MEN, LESS FOOD. 233 

-=from the cattle on a thousand hills, and the flocks and herds 
which are one day to be his own. The apple, known only in 
Siberia, is not yet a fi'uit, but a mere berry, and stings the mouth 
with its acrid flavor. The potato, known only in Brazil, is poison. 
Indian corn, unknown to Europe, Asia, or Africa, is an unnoticed 
Mexican weed, dwindling beside the spindling dahlia, in Avhose 
single whorl of- colored leaves no botanist would foresee the- 
present beautiful flower. Wheat was, perhaps, a bold and confident 
style of grass, which a few thousand years of culture in Egypt 
would develop into a valuable grain.* Even if it were fully equal 
to modern wheat it would be useless to our nomad, as he would 
not know how to grind or cook it. All things are so void of 
utility that only among the date groves, and naturally fruited 
jungles of i^frica, could he survive long enough to learn the 
utilities of any thing. 

94. Fewer Producers— Less Production. — But m this 
wretched nomad state, how are all values magnified ! A bead, 
or an inch of cloth, would be worn around his neck to charm 
away evil spirits. A master, who would promise him protection 
from hourly danger, and furnish him a daily brisket of raw beef, 
would be hailed with the gratitude due to a descended god, loved 
as Friday loved Crusoe, adored as a dog adoi-es his master. The 
richest boon he could desire would be well-fed slavery. He would 
kiss, as ornaments, those iron chains in which the philanthropy of 
later epochs, when money had become abundant, would see only 
degi^adation. In slavery begins his slow upward march, for at 
last he is a part of organized labor. Each day teaches him some 
new utility in metal, plant, flower, fruit, or animal. A million 
things become useful which either did not exist or were useless to 
him of old. The labor, that he would gladly have expended for a 
bead, would buy his successor a house. At flx'st even labor is use- 
less, for it has nothing to work with (tools), nothing to work for 
(motive), nothing to work upon (job or employment), and lacks 
the knowledge how to work (skill), except as snatching the 
things he would consume (appropriation) is work. Hence, 
though the world at no time needs so much labor as when man is 
in his savage state, yet there is no stage in which it is so little 
worth one's while to woi*k, or when so large a proportion of men 



* The student will emphasize the " perhaps." It is not meant here to affirm that any 
traces of an evolution from a less perfect form have yet been observed in wheat. On 
the contrary, history opens with wheat as perfect as to-day. 



as 4 ECONOMIC PRILOSOPHT. 

are idle, and despise work. Mr. Carey points out that, security 
being- so much nioi'e important than fertility, cultivation begins 
in the higli. easily defensible positions, among the rocky cliffs, 
and on the poor soils. It is a sort of adjunct to the chief business, 
viz, , intrenchment, fortification, and war. All arts begin with the 
poorest implements. Grain is pounded between two stones to 
make flour. Wool is sj)un first with the hand alone, then with a 
wheel. Sewing skins develops into weaving cloth, and the nee- 
dle becomes a shuttle. Soon the canoe hoists a sail. Iron arrow- 
heads, tempered toward steel, supersede flint. As machinery takes 
the place of muscle, more men are willing to work, and the rewards 
of industry slowly begin to exceed the rewards of crime. Virtue, 
conscience, honor are born. As new and better soils, new and 
better implements, new and better sciences develop, man becomes 
free in body — in government — in social action. Steam engines are 
set to work printing books and drawing railway trains, and man 
the victor rides and reads by the toil of those same elements which 
at first he dreaded. The supply of the means of subsistence is on 
the whole greater in large and compact populations than in small 
and si^arse, and gi'eater in each country when its population is 
many than when it is few. In short, everywhere profits and 
wages depend on the activity and success with which human in- 
dustry supplies all human wants. While in each indiWdual 
enterprise, wages tends to obtain a continually increasing share of 
the joint product, in the aggi'egate of enterprises at any time 
existing, the division is made pi'oximately even by the fact that 
capital and enterprise are continually on the lookout for new 
fields, in which, or new modes by which, the shai-e of labor shall 
be relatively less, and that of profit more. 

95. "Wages Are also Capital. — Is the ascendency of capital 
over labor an accident of a particular period ? Can it, by j^roper 
ari'angements, be dispensed with ? Or is it inherent in the nature 
of things, and therefore indispensable, except as the laborer may 
buy the capital that hires him.* 

*Ba8tiat* says truly: " Sentimental philanthropists, who see in this a frightful ine- 
quality which they desire to get rid of by artiiicial, sometimes by unjust and violent 
means, do not consider that after all we can not change the nature of things. An- 
terior labor (capital) must necessarily have more security than present labor, simply 
for this reason, that products already created, must always present more certain 
resources than products which are as yet to be created; that services already rendered, 
received, and estimated, present a more solid foundation for the future than services 
which are still in the state of supply. If you are not surprised that of two fisher- 
* "Harmonies of Political Economy," 377, 



WAGES ABE SMALL CAPITALS. 235 

The instant that capital loses its j)ower over labor, wages must 
lose their power over means of subsistence. Money, and wealth 
of every kind, in any form or quantity in which the laborer now 
seeks to possess them, must lose their power to command whatever 
comforts the laborer now commands by means of his wages. Cap- 
ital and money being one thing, can only lose its power in the hands 
of him who has much of it, by simultaneously losing its power in 
the hands of him who has but little of it. The twenty-five cents, 

men the one who, having long labored and saved, possesses lines, nets, boats, and 
some previous supply of flsh, is more at ease as regards his future than the other, 
who has nothing but his willingness to take part in the work, why should you be 
astonished that the social order presents, to a certain extent, the same differences ? 
]n order to justify the envy, the jealousy, the absolute spitefulness, with which the 
laborer regards the capitalist, it would be necessary to conclude that the relative 
stability of the one is caused by the inability of the other. But it is the reverse 
which is true. It is precisely the capital which pre-exists in the hands of one man 
which is the guarantee of the wages of another, however insuiiicient that guarantee 
may appear. But for that capital the uncertainty of the laborer would be still greater 
and more striking. Would the increase, and the extension to all, of that 
uncertainty be any advantage to the laborer ? . . . The questions which the work- 
man ought to ask himself are not, ' Does my labor give me much ? Does it give me 
little ? Does it give me as much as it gives to another ? Does it give me what I desire?' 
The questions he should ask himself are these : ' Does my labor give me,less because 
I employ it in the service of the capitalist ? Would it give me more if I worked in a 
state of isolation, or if I associated my labor with that of other men as destitute as 
myself ? I am ill situated, but would I be better off were there no such thing as capital 
in the world ? If the part which I obtam in consequence of my arrangement with 
capital is greater than that which I would obtain without that arrangement, what reason 
have I to complain ? If it be indisputably established that the presence of capital is 
favorable to my interests, and that its absence would be death to me, am I very prudent 
or well advised in calumniating it, frightening it away, and forcing its dissipation or 
flight ?'.#.. Take the first workman you meet with on the streets of Paris— and thus 
address him. " We are about to annihilate capital and all its works ; and I am going to 
place you in the midst of a hundred thousand acres of the most fertile land, which I shall 
give you in full property and possession, with every thing above and below ground. You 
will not be elbowed by any capitalists. You will have the full enjoyment of the four 
natural rights of hunting, fishing, reaping the fruits, and pasturing the land. True, you 
will have no capital ; for if you had you would be in precisely the situation you censure 
in the case of others. But you will no longer have reason to complain of landlordism, 
capitalism, individualism, usurers, stock-jobbers, bankers, monopolists. The land 
will be absolutely and entirely yours. Think if you would like to accept this posi- 
tion.' 

•' This workman would no doubt imagine at first that he had obtained the fortune of 
a monarch. On reflection, however, he would probably say : 'Well, let us calculate. 
Even when a man possesses a hundred thousand acres of land, he must live. Now, 
how does the bread account stand in the two situations? At present I earn half a 
crown a day, At the present price of corn (wheat) I can have three bushels a week, 
just as if I myself sowed and reaped. Were I the proprietor of a hundred thousand 
acres of land, at the utmost I could not, without capital, produce three bushels of corn 
ill two years, and in the interim I might die of famine. I shall therefore stick to my 
wages." 



236 ECONOMIC PHILOSOPHY. 

with wliich a laborer buys a meal, must lose its potency to induce 
the restaurant-keeper to sell the meal, at the same instant as the 
$25,000,000 with which a syndicate proposes to build a railway 
will lose its potency to induce laborers to work at the railway. 
The poor live by capital and wealth as well as the rich. To abol- 
ish the power of capital is to abolish the power of wages and put 
an end to all human association and co-operation. 



CHAPTEE VII. 

LAND. 

96. Values of Laud. — Beforelabor can beperforued, orman 
can exist, there must be space for him to live and work in. This 
si^ace will, by reason of the changes in the societary movement, 
be left in many places, as now at Icy Cape in Alaska, unsought 
for and utterly undesired. In those places all efforts at profit- 
able production would, at least at first, result in loss, owing 
to the commodity produced being too far removed from the 
demand. In other's every foot of available space is eagerly 
bought up and paid for. Tlie title is taken of whomsoever will 
show the best chain of transfer from the first appropriator, accom- 
panied by possession in the same chain of persons in whom the 
title has existed, from the first appro p;:-iator to the present holder. 
The rate, at which space will be paid for, depends upon the num- 
ber and value of the uses which compete for its possession, and 
these in turn depend upon its location, or centrality, with refer- 
ence to the social plexus, current, or sum of activities, which we 
call human society. 

As we have heretofore seen, in our chapter on ' ' Title and Use, " 
all working and living space, or as it is usually styled land, is, in 
the contemplation of economic science, every moment exposed at 
auction to whomsoever will pay, or forego, more than any other 
for its possession. If he already ]30ssesses it, he foregoes what the 
highest bidder Avould offer him, in order to keep it. If he does 
not possess it, and desires it, he pays more than any other bidder 
to obtain it. All land, therefore, is at all times, except in so far 
as law may trammel its transfer, economically in possession of 
the highest bidder. The sum thus bid, for the possession of 
land, is called the value of the land, where land is pur- 
chased in fee, or by a title that is absolute except against 
the right of eminent domain by tlie state, and it is called econo- 
mic rent, in communities where land is held by large proprietors, 
and occupied chiefly l^y tenants for terms of years. The value of 
land is the capitalization of its economic rent, or, in other words, 
the price at which it will sell is the principal, on which the sum, 



238 ECONOMIC PHILOSOPHY. 

obtainable for its annual rental, would bear the same ratio of per- 
centage as the profits or interest obtainable for capital invested 
with equal security, and ease of return, bear to the sum invested. 
The reasons why land bears its value, the causes which control 
its rise and fall in value ; the proportion in which the value of 
products, produced upon land, is divided, between the cost of the 
labor expended upon them (wages), the cost of the capital loaned 
for their production (interest), the cost of occupying the working 
space (rent), and the I'esidue (profit) remaining to the undertaker 
of the industiy {entrepreneur) are supposed, by some, to consti- 
tute the very substance of the science of political economy. 
The current of English discussion, from Ricardo to Mill, has con- 
nected rent with fertility, or the inherent productiveness of the 
soil, and has almost confined the discussion to agricultural 
land.* Rent, however, has almost nothing to do with 

*Adain Smith ("Wealth of Kations," Bk. i. Ch. xi., p. 67) says: "The rent'of land not 
only varies with its fertility, whatever be its produce, but with its situation, vphatever 
belts fertility." Dr. Smith seemed to hold that whatever the land produced more 
than was required to replace the stock (capital) employed in working it by a farmer 
and the ordinary rate of profit on capital, would go in rent to the landlord. But the 
notion that there is such a thing as an ordinary rate of profit on capital, is essentially 
visionary where some farmers will be losing their capital while others double it. 
But if there was an ordinary rate of profit on capital, then the capital in- 
vested by the landlord in the purchase of the land, and the capital invested by the 
tenant in working it, ought both to produce the same ordinary rate. But, in fact, such 
an "ordinary rate" nowhere exists. Dr. Smith again says (ibid.) : " Such parts only of 
the produce of land can commonly be broiight to market, of which the ordinary price is 
sufficient to replace the stock which must be employed in bringing them, together 
with its ordinary profits. If the ordinary price is more than this, the surplus part of 
it will naturally go to the rent of the land. If it is not more, though the commodity 
may be brought to market, it can afford no rent to the landlord. Whether the price is 
or is not more depends upon the demand." 

If it was, in Dr. Smith's mind, a satisfactory solution of the reasons of the price of 
corn (wheat)' to say that it depends upon the demand, why should it not have been an 
equally satisfactory explanation of the rate of rent of land to say that it depends 
on demand, and that the demand depends on the rate of profits on capital which the 
tenant expects to make by working it ? The rent is evidently that sum which the land- 
lord will take for the use of land rather than run the risk of getting a less sum, and 
which the tenant will pay rather than forego the use of the land. Its average rate may 
depend on considerations connected with security from enemies in war, its healthful- 
ness, its nearness to forts, mills, schools, commons, churches, fairs, factories, game, 
fish, stores, rivers, towns, forests, its improvements, its newness or oldness, its deposits 
of guano, gold dust, sea shells, coal, marl, lime, etc., or its availability for manufac- 
ture or exchange, its salt licks for cattle, its nests for birds, its sightly view, or the 
form in which the landlord will take his rent, whether in service, crops, or money, and 
even on the sentimental attachment the tenant may feel for it as his home, and the 
fact that his ancestors are buried tliere. 

McCidloch (note to "Wealth of Nations ") says: " The truth is that rent is entirely a 
consequence of the decreasing jiroductivencss of the soils successively brought under 



HOW BENT ARISE ti. 239 

fei'tility, even in the case of agricultui-al land. In the case of 
residence, manufacturing-, and commercial rents, the stars or the 
tides, the weather or tlie fashions, might claim an influence 
greater than fertility. 

If a pageant will pass down Broadway at 1 P. M., continuing 
until five, a window fronting on Broadway, and previously of no 
value, will rent for perhaps $5 for the brief period wliile the 



cultivation as society advances, or rather of the decreasing productiveness of the capi- 
tals successively applied to them." 

The last statement is particularly unfortunate, as rent of land diminishes as we ap- 
proach the frontier of civilization and of cultivation, yet the productiveness of the capi- 
tals applied to them increases, measured by the percentage along these frontiers, as 
the fact is that no one will there apply capital to cultivation at all, except where a high 
rate of return can be obtained on the small capital he usually applies. Moreover, a 
" decreasing productiveness of the soils successively brought under cultivation" is a 
totally unlike fact to tlie " decreasing productiveness of the capitals successively 
brought to bear on them." McCulloch, therefore, contradicts in the last half of the 
sentence the criterion laid down in the first half. 

Ricardo says: "Rent is that portion of the produce of the earth which is 
paid to the landlord for the use of the original and indestructible powers of 
the soil. On the first settling of a country in which there is an abundance of rich and 
fertile land, a very small proportion of which is required to be cultivated for the sup- 
port of the actual population, or indeed can be cultivated with the capital which the 
population can commanJ, there will be no rent ; forno one would pay for the use of the 
land where there was an abundant quantity not yet appropriated, and therefore at the 
disposal of whoever might choose to cultivate it." Ricardo's Works, by McCulloch, 
pp. 38-39. 

Even this statement is not true in principle, since, however small the population might 
be, if it contained only two persons there would be a liability that these two might 
both desire the same spot, and if so it would have a value for which the person out of 
possession might bo willing to pay, and this payment would be a price paid for space, 
of which rent is the annual equivalent. In the fairs held in savage liinds the booths 
acquire a rent value. The fact thiit abundance of unoccupied land exists does not pre- 
clude a competition for the possession of the occupied, and this gives rise to rent. 
Ricardo further says (ibid.) : 

" On the common principles of supply and demand, no rent could be paid for such 
land, for the reason stated why nothing is given for the use of air and water, or for any 
other of the gifts of nature which exist in boundless quantity." 

This also is an error, s'mce land having a pm'ticular location never exists except in 
one limited quantity. It can not be duplicated. Suppose the very simple case of two 
savages fishing on adjoining rocks, one of which is only large enough for one person 
to stand upon. The savage standing on this rock is catching fish as fast as he can take 
them from the hook. The other can take none whatever. After enduring this several 
hours and taking no fish, the savage on the inferior location says to the savage on the 
superior location, " If you will surrender your rock to me, I will give you half the flsh 
I catch while there." The offer is accepted and fish are caught there by the new man. 
The fish he pays for the rock are rent. Hence the presence of a continent of unappro- 
priated land is utterly futile to prevent a payment for appropriated land. 

Ricardo continues: " If all land had the same properties, if it were unlimited in quan- 
tity and uniform in quality, no charge could be made for its use, unless where it pos- 
sessed peculiar advantaegs of situation.^'' 



240 EOONOMIG PHILOSOPHY. 

pageant is passmg. The principle which governs the price of the 
■window exactly defines all economic rent. It is a payment for 
space, which is competed for actively, because of its nearness to 
the societary movement, in which the tenant desires to participate. 
It is the pageant going down Broadway, and the competition 
between the many desirous to see it, that puts a rent on the win- 
dow. Fertility is like the placiug of chairs at the window. If 

Prec'sely as Karl Marx, in treating of the cause of value, sets out by 
affirming that it is labor only, and then introduces the qualification of " socially neces- 
sary " labor, which changes the cause of value from labor to demand, so by a similar 
shift Ricardo, ill the midst of his argument that fertility causes rent, qualifies it by 
saying, '■ except where location causes it." This really gives away his whole point. 
For if it depends on location relatively to the demand for its products, then it can not 
depend on fertility, since land having the right location can have its fertility supplied ; 
but land, whatever its fertiliiy, can not have its location changed relatively to popula- 
tion, except by changing the movement of population. 

Eicardo further says (p. 36 ibid.): 

" Thus suppose land— No. 1, 2, 3— to yield, with an equal employment of capital and 
labor, a net produce of 100, 90, and 80 quarters of corn. In a new country where there 
is an abundance of fertile land compared with the population, and where, therefore, it 
is only necessary to cultivate No. 1, the whole net produce will belong to the cultivator, 
and will be the profits of the stock which he advances." 

What a bold assumption! The cultivator may give half his crop to some man with a 
lance or on horseback who protects him from savages. The first cultivators were non- 
fighting serfs and villeins, who paid rent in service chiefly that they might be protected 
by the military power of their lord from marauders and robbers, or at least might es- 
cape his own power to rob. They paid rent to power for security, and may have chosen, 
as Mr. Carey points out, the poor and thin lands near the baronial castle rather than 
the more fertile lands where less facilities would exist for safety. " Past, Present, and 
Future," by II. C. Carey. 

Ricardo continues : "As poon as population had so far increased as to make it neces- 
sary to cultivate No. 2, from which ninety quarters only can be obtained after support- 
ing the laborers, rent would commence on No. 1, for either there must be two rates of 
profit on agricultural capital, or ten quarters or the value of ten quarters must be 
withdrawn from the produce of No. 1 for some other purpose." 

Here it will be seen Ricardo bases his whole notion of rent on the sublimely stupid 
generalization that there can not be two rates of profit on agricultural capital, whereas the 
truth would be more nearly that of the many capitals employed in agricultural produc- 
tion in any country no two derive the same rate of profit. Of course but one average 
rate can be arrived at by striking an equation among all the rates of profit on agricul- 
tural capitals, just as one average height for all men might be reached by dividing the 
aggregated height of all men among the total number of men. But thus having arrived 
at an average stature for all men, how absurd would it be to argue that " either there 
must be two grades of stature among men," or, etc. There are as many rates of profit 
among agricultural capitals as there are grades of stature among men, and hence 
through the vent furnished by Ricardo's own exception to his theory of rent the entire 
theory escapes. 

Roscher, like Adam Smith, blends the two causes of rent, viz., fertility and favorable 
situation. He says (" Political Economy," by Lawlcr, Vol. ii. p. 14) : " Rent is that 
portion of the regular net product of a piece of land which remains after deducting tlio 
wages of labor, and the interest on the capital usual in the country, incorporated into 
it. Hence it is the price paid for the using of the land itself, or what Ricardo calls the 



LOCATION AND RENT. 241 

the location is satisfactory, the seats will be brought there. If 
poor land has the right location, relatively to lai'ge populations, 
it will be so tilled as to make it fertile. In the hanging gardens 
of Babylon, soil, subsoil, and sti^ata must all have been carried 
to the suspended structures. The land itself was brought to the 
location. The indestructible pi'operty of the soil, on which 
English economists have laid so much stress, was brought to the 
point where it was demanded, and there created. 
97. True Cause of Kent.— MacLeod well says : ''The only 

original inexhaustible forces of the soil, which are capable of being appropriated. 
This price also depends, of course, on the relation between demand and supply; tlie de- 
mand in turn on the wants and means of payment of buyers, but the supply by no 
means on cost of production, which from the definitions above given is here unthink- 
able. However, land has this in common with other means of production, that its 
price (value) is mainly determined by that (an;gregate value per acre) of its products." 
Again tp. 18) he says : " The favorable siiuation of a piece of laud opera;es in almost 
every politico-economical respect in the same manner as its fertility. If a market to 
be fully supplied needs to be fed from a cu'cuit of ten miles, the price must be sufli- 
cient to malse good not only the other cost of production, but the freight over ten 
miles. Hence, therefore, all producers living nearer to the market, who have to obtain 
a smaller outlay for transportation, and yet obtain the same market price for their pro- 
duce, make a profit exactly corresponding to the advantage of their situation." 

The degree of stagnation in the European land-market, and especially the infrequeucy 
of sales of the estates of the great land-holders in England, seems to have wholly ob- 
scured to the European economists the view which makes land an investment of capi- 
tal, as it is so generally regarded in America. As an investment of capital, rent is the 
effort of the owner to get a return on his investment, and it represents the sum the 
tenant is willing to pay for leave to use it as au implement of his industry. 

5as(!ia< ("Harmonies Economiqnes," Ch. 9) considers rent as the interest on the 
capital laid out in bringing land under cultivation, and Hamilton in his report to tlie 
Congress on the manufactures of the United States, 1793, treats rent as the result of 
the capital employed in the purchase of land to produce an interest. 

It is very certain that in the United States Hamilton's view, though deemed a vulgar 
error by Roscher (" Political Economy," Vol. ii. p. 21, note\ is in harmony with the 
fact that rents of real estate, after deducting taxes, insurance, and charges for trouble 
of superintending real estate, conform very exactly to rates of interest on money — so 
exactly that there is no substantial difference economically between being the mortga- 
gee to the full or nearly the full value of land, collecting interest on the loan, and being 
the landlord collecting the rent. The rate in both cases would be the same — showing 
that the principle which governs rents of real estate is the interest and profit which the 
capital invested in them would earn in other modes of investment. So MacLeod says 
(Vol. ii. "Econ. Phil." p. 21) that rent of land in England rarely exceeds 2;^ to 3 per 
cent, on the value of land, whereas in the United States it is usually from 7 to 10 per 
cent, in neiver and 3 lo 6 in older communities. 

Locke t"Considerations on the Lowering of Interest," Work?, ii. 17, ff) maintains the 
clo.>;e parallel between rent and interest. This may be truer, however, vhere laud is 
freely exchanged into money, and vice versa, as in America, than where it is not. 

John Stuart Mill (" Principles," Vol. i. p. 516) says: " The land is the principal of 
the natural agents which are capable of being appropriated, and the consideration paid 
for its use is called rent. Landed proprietors are the only class of any numbers or 
importance who have a claim to a sliare in the distribution of the produce, through 



242 ■ EUdNOMlG PHILOSOPHY. 

original and indestructible power the earth has is that of extent. "* 
Fertility is as variable a property in soil, as health is in man. 
Soils in England which once produced five bushels of wheat per 
acre now produce fifty-five. Some in Indiana which once produced 
thirty bushels produce but seven. Location, with reference to the 
societary movement, is also a variable quantity, changing with 
every change in the societary movement. When the societary 
movement centred in Nineveh and Babylon, x'eal estate was 

their ownership of something which neither they nor any one else have produced. 
It is at once evident that rent is the effect of a monopoly— though the monopoly is a 
natural one which may be regulated, which may even be held as a trust for the commu- 
nity generally, but .which cannot be prevented from existing. The reason why land- 
holders are able to require rent for their land is that it is a commodity which many 
want, and whicli no one can obtain but from them." 

This is not giving a definition of economic rent, but of private title or "appropriation, 
which is the condition precedent to rent, as we have seen, and which rests in seizure 
or monopoly, and is not rent itself. To define rent, Mr. Mill should have explained 
why men pay high prices for the monopolized portion of land, when there is always at 
someplace an unmonopolized supply in vast quantities to be had for nothing. Evi- 
dently, because they want not merely land, but land in a certain location. But why do 
they want land In this location? Because food when there produced can be sold at a 
profit on its cost of production. But why could it not in Patagonia or Siberia? Be- 
cause of cost of transportation. Men pay rent then chiefly to avoid transportation on 
persons, goods, or customers. Mr. Mill's view of rent is crude and tinctured by his 
socialistic tendencies. To him rent is despotism, which may be mitigated in degree or 
amount, but when mitigated ever so much what remains is despotism . 

A French writer, M. de Fontenay ("Du Eevenu Foncier," p. 260) says : " It may be as 
well to say somettiing here of one of the most striking instances of the advantages of 
position. I mean the high price paid for buying or hiring spaces in a great city. 
Some economists have thought they see in that the rent of land. They have let them- 
selves be duped by a word, as Montaigne would say. To think that it la really for a 
piece of land that one pays in Paris two or three hundred f raucs the meter, is as if one 
were to think that in buying the number of a hackney coach, it is for three yellow num. 
bers that he pays six to eight thousand francs— and that when a notary sells his prac- 
tice, it is a double knob of gilt copper, twenty paper cases or so, five or six shabby 
tables, and a bad earthenware stove, that he sells for 500,000 francs. The space of 
ground, like the number, the practice, is only a representative sign of the acquired 
rights, a title to advantages and profits, which may be discounted. What one pays for, 
in the price of the space of ground, is a share in the enjoyment of innumerable improve- 
ments of an advanced civilization; it is an immense opportunity to exert oneself and 
to shine, to know and be known. It is a powerful agglomeration of rich consumers, if 
one is a producer; of producers and products of all kinds, if one is more especially a 
consumer. It is a multitude of free enjoyments — the pavement, the troltolrs, gas, water, 
/«/«s, theaters, palaces, walks, museums, shops, libraries, marts of all kinds of wealth, 
material and intellectual. The inhabitant of Paris, who gives wp to a stranger his ' 
share in these advantages, has the perfect right to sell them to him at a good price. 
For it is he, or they, whose right he represents, the citizens of a great city who have 
gradually made it what it is. It is they who by their labor, their sacrifices, their strug- 
gles of every kind, by their gold as by their blood, have acquired and paid for these 
rights, this security, this progress, this public luxury, these works of general utility, 

* " Principles of Economical Philosophy." 



CITY RENTS. 243 

high there; now it is low. But it is solely with reference to this 
element, that rent, or value of land, rises or falls. 

In point of fact, tlie one law Avhich governs the value of real 
estate, in city or country, and whether to sell or to rent, is the 
same, viz.: Demand for it ; i. e., the number of possible, and 
profitable, uses which compete with each other for its occupation. 
Land is like an object put up at auction — its price depends on the 
number and intensity of the bidders, and these, in turn, on the 
variety and value of its utilities. 

On the leading corners of a great city, say of Wall Street and 
Broadway, in New York, land attains its highest value, because 



these refiuements of civilization, this immense development of intellectual and. ma- 
terial life." 

Of the pretended distinction between profits of capital and interest on money and 
rent of land, De Fontenay says (" Du Kevenu Foncier,'' p. 3): "We propose here to 
abolish these false distinctions, incompatible witli the character of harmony and sim- 
plicity which the laws of economics ought to have, and to prove that there is one and 
only one law of value, income, and capital, under all its forms." 

MacLeod (" Principles of Econ. Phil.," Vol. ii. p. 18) says : " Fontenay, in his re- 
markable volume on rent, has at least point-ed out tlie fundamental fallacy of breaking 
up economic phenomena into Sep irate classes and finding a separate law of value for 
each; and he has shown most irrefragably that rent, profit, and interest all proceed from 
the same cause— the excess of the value above the cost of production, which caa 
only be affected by the intensity of the demand and the limitation of the supply." 

Both Fontenay and MacLeod ti'eat the Ricardo-Mill tlieory of rent as tending logically 
to the scheme of confiscating the rent of land by taxation, in which they preceded 
Henry George. Jevons, Sidgwick, Fawcett, and Bonaniy Price adopt essentially the 
Mill-Ricardo theory of rent, viz., that it is a price paid for a clioice of more productive 
over less productive lands, and that the amount which will be paid for the choice will 
be commensurate witli the greater productiveness of the laud, so that the landlord 
will get the entire value of the greater productiveness of the land, never once dividing 
the advantage of that greater productiveness with the tenant. But is it fair towards 
the tenant to suppose that, in looking for a better situated or more fertile farm, his hope 
of getting any of the advantage of its better situation, or fertility, is always a delu- 
sion? Why is it that the economists, who strenuously insist that an exchange profits 
both parties, lose sight of this principle wholly when they treat of the exchange which 
a tenant makes of money for the use of land? Whatever may be the advantages of its 
occupation for a year, and whether they arise from fertility or location, why will not 
the competition among landlords compel them to divide the value of this advantage, 
equally between themselves and their tenants, so that one-half of it should inure to 
the tenant and take the form of profits on his capital? Is it true that a tenant never 
has any interest in selecting a good, fertile, or well-located farm, over what he would 
have in selecting a poor one? He could have no such interest if it were true, as matter 
of economic law, that the landlord would get the entire difference in value as rent. 
And if there be such a law, concerning the rent of the one implement land, why should 
it not apply to all other implements and agencies which we hire and pay for? Di^es 
the bestlawyer absorb, in fees, the whole difference between what his services are worth 
to his client and what his client could get those of the poorest lawyer in practice for? 
Does the best means of transportation, say the railway, absorb in freights the whole 
difference between what the shipper can get his products carried by rail for over what it 



244 ECONOMIC PHILOSOPHY. 

all those kinds of business in which most profit can be earned by 
the use of the smallest space, such as banking, stock brokerage, 
insurance, first-class law oSices, bank note engravers, and man- 
aging offices of great corporations, compete with each other for 
its use, on account of the facilities it affords for dealing with a 
large number of people within a few hours of time. Land a lit- 
tle less valuable is taken for great hotels, newspaper and book 
publishing houses, importers' palaces, restaurants, and retailers 
of all grades. Land still less valuable answers for private resi- 
dences, manufactures, storage, etc., the price of every lot, how- 
would cost him for the slowest and M'orst means of transportation in use? Does the 
best equipped and most productive factory absorb, in its profits of manufacture, the 
whole difference between the value of the work it will do, and that which the poorest 
means of manufacture in use by man would accomplish ? 

No one would answer any of these questions in the aifirmative. As applied to the 
hire of lawyers' services, of railways as an implement of transportation, or of machin- 
ery as a means of manufacturing goods, the Ricardian law is not dreamed of. A law- 
yer can not charge according to the difference in the a alue, to his client, between his 
services and that of the worst lawyer in u^e, because that difference is not calculable or 
practicable, and because there are so many other competent lawyers competing with 
him, the resul t of whose services would have been the same as if he had been employed, 
that he is compelled to charge simply according to the labor-time, i. e., the sum he 
could afford to take, rather tlian risk being unemployed, during the time required. Why 
then will not competition between farm owners compel them, like competition between 
lawyers, to hire out their farms solely with reference to the number of farms equally 
productive and well located, out of which a tenant can make as good an interest on his 
capital as on the farm in question, and out of which it is reasonably certain that some 
will not be rented? In that case it is not a question between the product of the best 
and worst lands in use which determines the rate of rent, but rivalry between the lands 
equally fertile and well situated, which shall escape a loss of return on the capital it 
represents, which is a motive of the same nature as the lawyer's effort to avoid losing 
his time, the railway's effort to avoid loss of traffic, the factory owner's competition 
with other factories for business, or the competition of merchants with each other for 
trade. No one supposes that the purchaser of any other commodity, than the use of 
land for a year, has no possible interest in the question whether he is buying a good or 
a poor commodity, as the d'fference in price which he will be charged will so exactly 
offset any difference in quality or advantage that the merchant and manufacturer will 
get it all, and the buyer will get none. Why, then, should this precise formula be sup- 
posed to apply to the purchase of a year's use of land? In fact, it is well known that in 
all classesof rentals, whether of land or city property, as the quality of the property 
rises, the rate of return the landlord can get for it falls, partly because on high class 
property the preservation of the quality of the property becomes a much more important 
consideration than the annual rent, and partly because the number of tenants capable of 
hiring first class property is much fewer than the number capable of hiring fifth class. 
Hence, a high class country residence on the Hudson River worth $100,000 would not 
ordinarily rent for more than four per cunt, on its value. A residence of equal 
value in town might rent for five. If built in flats for families, it would rise to 
ten per cent., and tenement houses for laborers rent for 15 to 20 per cent. 

But in saying that rents are graded according to the capital represented, it maybe 
objected that we travel in a circle, as the capital represented is always based on the 
rents it yields. This is true, and in this sense all economic argument travels in a circle 



SUBURBAN RENTS. 245 

ever, being accurately determined by the number of possible and 
profitable uses which compete for its possession. Within a cir- 
cuit of ten miles of the city, land has a suburban value so great 
that poor men can hardly atford to get an acre of it for floral and 
hot-house gardening. From ten to thirty miles from the city, 
gardening, however, prevails, and the labor of two or three men 
will be expended on from one to five acres of ground, so numer- 
ous and valuable are the'crops it produces, under the high state of 
cultivation to which they bring it. From a grape vine, which 
occupies but two feet square of space, they pluck enormous clus- 



since all the phenomena of Vcalue also travel in a perpetually varyln? circle, in which 
we are always measuring varying quantities, according to standards which themselves 
vary only a little less than tlie quantities they measure. We conclude that rents, in 
the infancy and origin of the relation of landlord and tenant, are like wages, too closely 
associated with the reign of military force to be graduated according to fertility of 
land. The land is given to the tenant as a reward for fighting for his lord in battle, and 
bravery is the thing his lord chiefly wishes to buy, and pay for, in land, while security 
and the protection of the clan, or baronial horde, is what the tenant seeks. Hence he 
takes land according to his faith in the prowess of his chief. As Fawcett says* : 
"Lands obtained by force had to be held by force; and before law had asserted 
her supremacy, and property was made secure, no baron was able to retain his posses- 
sions unless those who lived on his estates were prepared to defend them. There thus 
arose almost universally some personal relations between landlord and tenant, and the 
personal services which such a feudal tenure required formed a considerable part of 
the rent which was paid for the land," 

In this condition of things, military security, as Carey says, would cause lands to 
be rented according to their inaccessibility, nearness to the haronial castle, or to ores 
from which armor could be made, and other elements of safety which would involve 
mountainous or hilly situations, and poor land would often first pay rent, not because 
of its poverty, but of us defensibility, and the form of rent paid would be per thrust and 
per blow, and not per acre or per bushel. Fawcett continues : 

"As property became secure, and landlords felt that the power of the state would 
protect them in all the rights of property, every vestige of these feudal tenures was 
abolished, and the relation between landlord and tenant has become purely commer- 
cial." ("Manual of Pol. Econ.," p. 115.) If so, why can not the terms, on which 
the landlord sells the use of land, be stated according to the purely commercial for- 
mula, which certainly is the one applied when the capitalist, who desires to become a 
landlord, attempts to buy the title in fee to the land? The landlord then pays for the 
fee that sum which the previous owner would regard as calculated to procure for 
him a " larger quantify of the necessaries, conveniences, and comforts of life" than 
the title to the laud itself would. The price is regulated according to the quantity of 
land about equally desirable then being offered in the market, and the number of purchas- 
ers seeking to buy. Landless desirable was wholly out of the competition. It was as 
far removed from the problem as stones are when one wants to buy bread, or as fence- 
rails are when one is looking for oranges. All land, at all times, depends for its money 
price, on the rates at which capital will seek investment in it. If capitals hold aloof 
from investmen*. in land it must fall until they again buy. Hence the ultimaie rates 
of rent must be the ordinary rates of profit on capital in business generally, at the time 
and place of renting the land, allowance being made for relative dearrees of trouble in- 
volved in superintending the land, and prospects of rise of value by holding it. 

* ("Manual of Political Economy," p. 115.) 



246 ECONOMIC PHILOSOPHY. 

ters, whose price would buy the product in wheat of an acre of 
land in Iowa. The same grapes could be raised in Iowa, so far as 
the soil is concerned, but only a large city furnishes a suiScient 
number of luxurious customers to create a market for fruit re- 
quiring such rai'e skill in its culture. Fi-om the next two feet 
square he plucks twenty pears, which sell at ten cents each, or 
$2. A plot of half an acre produces $500 worth of strawberries, 
no better than could be raised in Iowa, save that in Iowa they 
would have no market near enough to admit of transportation. 
So, within a circuit of twenty miles of a great city, a thousand 
ci'ops compete with each other for the occupation of the soil, be- 
cause near at hand a thousand customers compete with each 
other for those crops when raised. Nevertheless, the competition 
between grapes, pears, currants, strawberries, blackberries, cran- 
berries, quinces, plums, etc., for the occupation of land is so much 
less valuable than the competition between bankers, brokers, 
lawyers and railroad presidents, that a year's rental of a room in 
a fourth story of a building on the corner of Wall and Broadway, 
is worth as much as the fee of an acre of land for gardening pur- 
poses, both ranging at fi-om $500 to $1,000. 

If we take the map of the United States, and draw around each 
large center of population a series of concentric rings, one series, 
for instance, around New York, another around Philadelphia, 
another for Boston, Chicago, New Orleans, and San Francisco, 
the successive areas bounded by these rings mark, as they recede 
from their centers, a rapid diminution in the number of uses to 
which the land may be put, and, consequently, of the competitors 
for its purchase, and of the value it beai's. From five to ten 
miles from Chicago the land is gardening and suburban, and is 
worth, generally, several thousand dollars per acre. From ten to 
twenty it is chiefly small farming, and falls to from one to two 
hundred, except as it is raised by vicinity to new suburban centers 
of population, like Evanston, South Chicago, etc At tovij miles 
from Chicago it is available only for ordinary Western farming, 
which consists of raising live stock, dairy pi'oducts, wheat, rye, 
corn, and other crops which put the product of a good many 
acres of land into small bulk, and small value for transportation 
to consumers, most of whom are one thousand miles away. Here 
the number of crops available, instead of being several hundred, 
as ill gardening locations, is only four or five, and the production 
of those must be at the minimum of profit, because millions of 
farmers equally distant from a market are competing with each 



REDUCING BENTS. 247 

other in producing the same crops. Hence, the value of land de- 
pends simply on the number of uses to which it can be put, owing 
to its nearness to the consumers of its products. Now, as at all 
times far more increase in ivealth takes the form of an increase 
in the values of lands than is found in all other modes of profit 
combined, it follows that the growth of men and communities in 
wealth depends largely upon their nearness to, and cheapness of, 
communication with the consumers of their products. 

98. Rent aufl Transportation. — It is singular that Mr. 
Mill should have stumbled upon the proposition that perfectly 
gratuitous transportation would annihilate rent,* without follow- 
ing it out to its obvious corollary that it is the cost of transporta- 
tion to and from the lands that bear no rent, or a lower rent, that 
fixes the rate of rent that can be asked for those whose pi-oduct 
involves less transportation ; in short, that rent is chiefly a j)rice 
paid to avoid transportation. 

In this point of view, rent is the centrifugal force, which dis- 
perses men from the centers toward which commerce and ex- 
change attracts them, and obliges them to form new and smaller 
centers. As men go from the centers they avoid rent and land 
values, but lose and incur transportation. As men draw near the 
centers they save time and transportation, but increase rent. If 
there be some locations better adapted than others for production 
in any form, the highest economy of society, as a whole, requires 
that these locations which admit of a higher rate of production 
should fall into the possession and custody of those who will im- 



♦ Mill, "Political Economy," Vol. i. p. 528, says : " The tendency of improved com- 
munications is to lower existing rents, by trenciiingon tlie monopoly of tlie land near- 
est to the places where large numbers of consumers are assembled. Roads and canals 
are not constructed to raise the values of the land which already supplies the markets, 
but (among otlier purposes) to cheapen the supply by letting in the produce of other 
and more distant lands ; and the more effectually this purpose is obtained, the lower 
rent will be. If we could imagine that the railways and canals of the United States, in- 
stead of only cheapening communication, did their business so effectually as to anni- 
hilate cost of carriage altogether, and enable the produce of Michigan to reach the 
market of New York as quickly and as cheaply as the produce of Long Island— the 
whole value of all the land of the United States (except such as lies convenient for 
building), would be annihilated ; or rather the best would only sell for the expense of 
clearing and the government tax of a dollar and a quarter per acre, since land in 
Michigan, equal to the best in the United States, may be had in unlimited abundance by 
that amount of outlay. But it is strange that Mr. Carey should think this fact incon- 
sistent with the Ricardo theory of rent. Admitting all that he asserts, it is still true 
tliat, as long as there is land which yields no rent, the land which does yield rent does 
so in consequence of some advantage which it enjoys, in fertility or vicinity to markets 
over the other, and the measure of its advantage is also the measure of its rent." 



248 ECONOMIC PHILOSOPHY. 

part to them the highest rate of production of whicli they admit. 
The economic force which provides most room for all, by obliging 
each to economize and curtail in the use of room, so as to occupy 
no more space than he can use to the best advantage, is rent. In 
agriculture, the chief need of society is that the laud shall be used 
for tlie production of those crops of which there is most economic 
need, as shown by the degree of effective demand. Near to great 
centers of population, flowers, bulky vegetables, roots, fruits, 
and grass for hay, are most needed. At the least, the last-named 
item will continue to be among proxi-mural cro^js, as long as 
horses do most of the intra-mural transportation of large cities. 
Agricultural rents, therefore, reserve the land near the great 
cities for the bulky crops, in which a little ground worked over 
with great labor produces a more valuable, but less transporta- 
ble return than is obtained from the great farms at a distance 
from the social centers. On the other hand, as we go out through 
Ohio, Illinois, and Iowa, and still more, as we reach Dakota and 
Wyoming, with every fall in the values of land, there is an in- 
crease in the degree in which extensive crop-raising takes the 
place of intensive, or in which that form of agriculture is fol- 
lowed, which derives products of smallest bulk from the largest 
area of land. Finally, in Buenos Ayres and Patagonia land is 
sold, not by the acre, but by the number of heads of cattle it 
contains, and these are estimated, not for their meat, but only for 
their hides and tallow. 

Nor is there any variation in the economic law, which thus 
economizes space at the extremities, and that which does the 
same at the center. Everj^where it is expressed by saying that 
rent distributes working space according to the number and 
value of the uses that compete for its possession. 

In the heart of a great city, a family occupies two rooms at a 
cost for rent of $8 per week, when four miles out toward the 
suburbs they could hire a cottage of six rooms for $4 per week, 
and by going out twelve or twenty miles they could hire an acre 
of land, a cottage of ten rooms, and fruit garden for perhaps |3 
per week. If asked why they do not go where they can get more 
room for less rent, they answer, " What is economy to one family, 
may be waste, or loss, to another. Those of us who think we 
can incur the loss of time, and increase of transportation involved, 
and support ourselves in the short hours left in the day do so. 
But many of us could not keep our places, and lose the time and 
pay the fares, involved in so much daily travel to and fro," 



COMPETING USES. 249 

Reverting now, from the social centers to the periphery, we 
find the same economic law. In Alaska, at Icy Cape, the sea-lion 
competes with the bear only, for the possession of land. This is 
anterior to the existence, in land, of any economic value. But 
when the fur and seal companies begin to compete with each 
othei", it first attains a value, because two possible uses compete 
with each other, viz., taking bear and taking seals. But as it 
cannot be cultivated, its value is small. Coming down to Sas- 
katchawan, in Canada, wheat, buckwheat, and potatoes can be cul- 
tivated, and with five possible uses its value rises. In Minnesota 
ten grains, five grasses, and six root crops can all be cultivated, 
and successfully carried to consumers, without the cost of carriage 
consuming the entire price. Besides, cattle, sheep and hogs can 
now be grown upon it. Twenty-four uses compete for the land, 
and its value rises to from $20 to $50 per acre. Near St. Paul and 
Minneapolis small gardening, dairying, poultry raising, bee cult- 
ure, fruit can be marketed, and thirty possible uses compete, 
and the value rises to $250 per acre. Then it is sought, if within 
two miles of the town, for residence and garden spaces but not 
for trade. Drawing nearer, it is sought for retail but not for 
wholesale — or for manufacturing, but not yet for exchang'ing or 
banking. With these competitions it rises to $100 a front foot, 
unimproved. So, as the competitions increase in their number 
and value, the A^alue of the land rises, until, in the heart of 
the large cities, as high a price will be paid, for a few cubic 
feet of space, as would be paid in remote districts for a mile 
square. 

99. Rent as a Balance to Transportation. — In no other 
way can the situations or locations in which most business is 
possible, be secured for those who have the requisite means, skill, 
prudence, and ability to do it. Even comjDeting workers, in differ- 
ent countries, find their rents adjusted by the same economic law. 
In Iowa, farm-land rents for $3 an acre, in England for $25 an 
acre. The acre in Iowa will produce only twenty bushels of 
wheat, because its distance from market makes a hasty and cheap 
tillage, without fertilizers and with little labor, yield the largest 
return from a given capital. The acre in England, being nearer 
the market, can be jDrofitably brought up to a higher state of till- 
age, averaging thirty bushels per acre. The wheat in Iowa is 
worth only seventy cents, because costs of ti'ansportation and 
handling, amounting to sixty cents, are necessary to get it to its 
consumer in Pennsylvania, New England, or Manchester, Eng- 



250 ECONOMIC PHILOSOPHY. 

land, where it is worth |1.30. Hence the Iowa farmer gets from 
his acre twenty bushels at seventy cents, or $14, out of which 
he pays $3 rent, leaving him $11. The English farmer gets $1.30 
for thirty bushels, amounting to $39, out of which, if he pays $25 
i*ent, he has $14. Supposing the English farmer to pay $3 per 
acre for fertilizers, which the Iowa farmer does not use, the final 
returns to both would present that perfect equalization of returns 
from capital and labor, toward which all investments and employ- 
ments are constantly tending, but which they never exactly reach. 
On the other hand, suppose cost of transportation for the Iowa 
farmer to be diminished by thirty cents per bushel, he makes an 
advance in profits of $7 per acre, an event which the English ten- 
ant could only meet, either by getting a reduction in his rent, or 
labor, or an improvement in his crop. 

The transportation tax of the Iowa farmer, by an economic law 
of unstable equilibrium, is thus held in a state of equality with 
the rent tax of the English tenant, allowance being made for the 
higher average rates of profit required on capital in Iowa than is 
necessary in England. Suppose the English farmer to pay $3 
per acre for fertilizers, and that the Iowa farmer would manure 
his lands as highly, and raise their productive power to the same 
standard as that of the English farmer, if he got as good a price 
for his wheat, it would then follow that the tax t)f transporta- 
tion which the Iowa farmer now pays is as follows : 

Diminished product of 10 bu. per acre at $1.30 per bu. $13.00 
Diminished price of freight on 20 bu. 60c 12.00 



Total, $25.00 ; 

while the English farmer's tax on the production of the same 
value in corn is 

Rent £5 per acre, $25.00 ; 

or the equivalent of the Iowa farmer's tax for transportation. 

Of course it is the fact that capital and labor, invested in wheat, 
growiiig in the Western States, do reap a larger profit- and-wage 
fund, than in the Eastern States and in England, that causes the 
line of cultivation to push further westward each year. But that 
this tends toward equalization, between English capital invested 
in wheat-raising, and American, is shown by the " Report of Read 
and Pell on American Agriculture," in which they assume that 
the Western wheat-grower gets his land gratis- They say : 



WRAT RENT SAVES. 251 

£ s. d. 
Cost of growing a quarter of wheat (480 lbs.) in the West including 

delivery to local depot 18 

Freight to Chicago 6 8 

Theuce to New York 5 2 

New York to Liverpool 4 9^ 

Handling in America (which may be avoided on through rates) 1 1 

Liverpool charges 2 1 

1 17 9K 
The estimate may possibly, ere long, be affected by a reduction in the freights from 
the farms to Chicago to the extent of one-half. Allowing a deduction on this head of 
'is. 9(;., or about %d. a bushel, the estimate would be brought down to 44s., or, without 
Liverpool charges, to 42s. the quarter. 

This report shows a clear cost, of $10.50 per quarter of eight 
bushels, to the American wheat-raiser, against whicla the Enghsli 
grower has to offset his rent of land and wages. If the Englisli 
grower raises thirty-two bushels per acre, the local protection 
which he derives, on his thirty-two bushels, from the transportation 
tax on his American comxDetitor, amounts to $42 per acre, less the 
wages he pays per acre for cultivation. If he pays £5 per acre 
rent, and $17 per acre wages, he is even with his American rival 
in his chances of profit. 

The fu'st merchants, in all countries, are peddlers. In this eai'ly 
period the value in the peddler's pack exceeds, perhaps, that in 
the land over which he travels.* 

The peddler pays no rent, but takes all goods to his customers. 
When he opens his store, so that his customers may come to him, 
his rent rises pretty nearly in proportion to the amount of trans- 
portation he avoids, relatively to the number of sales made. The 
degree, in which it falls short of so rising, measures the profit he 
makes by the change from traveling to paying rent. The first 
manufacturers and artisans were traveling shoemakers, tailors, 
blacksmiths, tinners, spinners, and weavers, who went fi'om house 
to house doing work for, or carrying it to their patrons. When 
they open a shop or factory, they save a large cost of transporta- 
tion on their goods, machinery, and persons, and, as there are 
many competitors, all trying to make the same saving, the com- 
petition between them, for the possession of land, enables the land- 
lord to charge them as rent a sum about equal to the average 
profits on capital when invested in land, and the remainder of his 
saving by transportation accrues to the manufacturer as his 
profit of substituting rent for ti'ansportation. 

* In 1624, the site of the present city of New York and its suburbs was sold for $5. 
(" Condition of Nations," by Kolb, tr. by Streater, p. 803.) In 1815, Chicago was sold 
for £6 10s. About 1810, Cincinnati was sold for a horse. (" English Laud and English 
Landlords," p. 283.) 



252 



ECONOMIC PHILOSOPHY. 



100. Rent as a Dispersive Force on Population. — Essen- 
tially, therefore, rent is a natural social force operating to dis- 
perse population, and economize working space, by imposing a tax 
upon the occupation of the more valuable localities, proportionate 
to their value for worMng purposes. This tax is prevented from 
being a monopoly, in favor of the land-owning class, by the fact 
that the profits of capital invested in land-owning tend constantly 
toward equality with the profits on capital invested in other 
kinds of business. It is prevented also from oppressing the labor, 
or wages, of one part of the world, at the expense of another, by 
the fact that it is equably balanced, by an equivalent tax for 
transportation of persons and commodities, against those who seek 
to escape the rent-tax by locating at a distance from the social 
centers, but where the pi'oducts of their industry are not in local 
demand. This tax of transportation is recoi'ded in the reduced 
prices of products requiring transportation, at points distant from 
the centers of consumption or demand, as shown in the following 
table prepared by the Department of Agriculture. It shows the 
average production of corn per acre, and its cash value per acre, 
and average price per bushel at the place where grown, in eighteen 
Northern States, for 1865 : 



State. 



Bushel per 


Cash value 


Value per 


acre. 


per bu. 


acre. 


431/3 


$1,151/2 


$48.89 


Sl'A 


1.22V. 


38.28 


31V. 


1.22 V. 


38.58 


33V3 


i.iov. 


36.83 


43=^/4 


1,151/4 


50.42 


34 


1.21 


41.14 


33 


1.21V. 


40.10 


24 


.95 


22.80 


40 


.80 


32.00 


41V. 


.44V7 


18.43 


38V2 


.601/9 


23.14 


40 2-5 


.38'/:o 


15.63 


35V4 


.291/4 


10.32 


411/. 


.46 


19.09 


42V. 


.30 


12.78 


38 


.51V. 


19.57 


461/. 


.59 


27.43 


411-6 


.53 


21.82 



New Jersey. . 
Connecticut. . 
Rhode Island . 
Massachusetts . 
Vermont . . 
Maine . . . 
New Hampshire 
New York 
Pennsvlvania 
Ohio ■" . . . 
Michigan . . 
Indiana . . 
Illinois . . . 
Wisconsin . . 
Iowa .... 
Minnesota . . 
Nebraska . . 
Kansas' . . . 



Illinois was in 1865 a corn-growing State, dependent largely on 
consumers east of the Alleghanies for the disposal of her surplus. 
From the value of her corn, therefore, was deducted the cost of 



THE TRANSPORTATION TAX. 253 

shipping' from 800 to 1,200 miles, so much of it as was con- 
sumed in this countiy, while, from the portion consumed in 
Europe, there was deducted, relatively to its price in Europe, the 
cost of transporting it 3,000 miles. Hence her product in 1865, of 
117,095,852 bushels averaged but 29'/4 ceilts per bushel. Had her 
consumers been in the Northwest, she would have received the 
average price paid for New England corn, $1.20 per bushel. Her 
tax for transportation, thei'efore, was 90V4 cents per bushel, 
amounting on her entire crop to $105,473,856.06, or four times her 
actual returns for the crop. This tax is the all-controlling in- 
fluence in determining the values of products in all parts of 
the United States, and, through its influence on the values of prod- 
ucts, it determines the mode of tillage which will be pursued, 
and especially whether it will be such as to exhaust or enrich the 
soil. 

101. Exhaustion of Soils.— Prof. Henry, the late eminent 
Secretary of the Smithsonian Institution, estimated "that more 
wealth was invested in our soil, in fertilizing matter, at the 
moment this continent was discovered by Columbus, than there is at 
present above the surface in improvements and all other invest- 
ments. The fertilitj^, which ages had accumulated upon its surface, 
has been the capital upon which the farmer has been drawing, with 
reckless pi-odigality, from the first settlement of the country." 

The wastefulness of the chief part of Southern agriculture, 
deserted houses standing in the midst of exhausted plantations, 
which were once fertile, were formerly attributed to slavery. 
Both it and slavery were in harmony with the waste consisting 
in the export of the soil in the form of cotton, molasses, and 
tobacco. This, by keeping the country constantly burdened by 
an increasing poverty and debt, made the enslavement of the 
laborer seem a consequent necessity, since the work was too hard 
and the net returns too small to enable the planter voluntarily to 
pay wages. He was generally eighteen months in debt for the 
means to feed and clothe his family and servants, and had often 
hardly more purchased luxuries than many mechanics at the 
Noi'th earning three dollars a day. 

But it is not so generally known that the Southern s^^stem of 
agriculture was only more wasteful of the soil than the Northern, 
in the degi'ee that it was further removed from its markets. Wheat 
near Albany, New York, declined from an average yield of from 
20 to 40 bushels per acre in 1775 to 16 to 20 bushels in 1785, to 12 
to 15 bushels in 1815, while, by the State census of 1845, Albany 



254 ECONOMIC PHILOSOPHY. 

County gave T'A bushels per acre, Dutchess 5, Columbia 6, and 
Westchester 7. Wheat declined in Ohio, in the 50 years preceding 
1860, from 30 to 15 bushels per acre, and five yeai'S later to an 
average of 13. Indian corn, in the same State, in the five years 
from 1850 to 1854, both inclusive, averaged 38.81 bushels to the 
acre, while in the next five it fell to 32.95 bushels, and in 1863 to 
28.96 bushels. 

That these are no necessary results of cultivation, is shown by 
the fact that Massachusetts, whose soil was originally as jjoor 
as that of any State, has so advanced in ave«'age fertility that it 
appears in the census of 1860 as producing the lai'gest average crop 
of wheat to the acre — 16 bushels — while Georgia produced the 
smallest average crop — 5 bushels. Connecticut, originally a poor 
sandy State, but full of manufactures, must have greatly im- 
proved her soil to appear, in the same census, as producing the 
largest average crop of corn per acre — 40 bushels — while South 
Carolina produced the smallest. The Ohio Agricultural Eeport 
of 1862, referring to the decline in the wheat-product in Ohio, and 
its advance in other countries, says : " The lowest average of 
wheat in any county in England is 34V2, and from that up to 50 
bushels per acre. It is a historical fact that, within the past two 
hundred years, the best soils in England did not produce to exceed 
six bushels of wheat per acre. " A like improvement is going on 
in the soils of France, Belgium, Holland, Prussia, and Northern 
Germany, and in much of China and Japan ; a waste and decay in 
the soils of Mexico, most of the West India Islands, Brazil, India, 
since its possession by the English, Ireland, Portugal and Turkey. 
All of these are engaged in exporting the raw product of their 
soils for foreign consumption, while the countries in which soils 
are advancing in fertility, are those which export nothing until it 
is finished ready for the consumer. 

The same improvement is occurring, for the same reason, in the 
horses, sheep, cattle, hogs, poultry, and other domestic animals 
in the manufacturing States, and the same deterioration in the 
breeds in the States x^ui'ely agricultural. 

Formerly the Illinois farmer went to England for improved 
breeds of cattle, horses, and hogs, and prized his Durhams, 
Devons, and Berkshires for their blood, while he passed heavy 
j)enal statutes and made it a crime to even drive cattle across the 
State from Texas. The latter spread contagion and death in his 
dreaded path ; the former imparted beauty, growth, weight, and 
health to all the flocks with which his blood might mingle, 



ROTATION OF CROPS. 255 

Until at last it faded out among the infeinor stocks of the 
prairies. 

The order of agriculture rises in proportion to its nearness to its 
market of consumption, and declines as it is removed therefrom, 
and hence, soils increase in fertility as the producer and 
consumer take their place side by side, and decline as they are 
distant from each other. But the reason of this is, not so much, 
the Avithdravval of the nutritive matters contained in the crop ex- 
ported, as the fact that the farmer who is far removed from his 
market can not sell all the crops which he ought to raise in order 
to practice that fair rotation of the crops which would renovate, 
manure, and enrich the soil. Some plants grow principally from 
the atmosphere, and these enrich and restore soils. Others draw 
from the soil peculiar elements, as wheat drains it of silica and 
potassium.* 

If, therefore, the preservation of the fertility of soils depends 
on the rotation of crops, and if a fai-mer distant from a market can 
And sale for only a few of the crops needed in practicing such rota- 
tion, here is a source of decline in fertility analogous to, but not en- 
tirely identical with, the deiiortation of the constituent elements 
of his soil in the crops he exports. For, if he sent his crops but 
ten miles, their elements might never return directly to his lands. 
But at a distance of ten miles from an adequate market of con- 
sumption he could raise clover on lands exhausted by wheat, 
and sell his hay, unbaled, for more than he could have sold the 
product of the same land in wheat. But the farmer fifty miles 
from his consumer of hay must bale it before he can send it, and 
if 100 miles distant he can only send it by water, baled, while if 
250 miles distant he can not send it at all, the freights consuming 
the whole value. The grasses which ripen slowly through long 
periods are the best renovators. But if no return can be got for 
them they are merely pastured, i. e., trodden underfoot and 
wasted. Besides these, a farmer whose market is near may raise 
root crops — the beet, turnip, and carrot which derive nearly 
their whole growth from the air, and hence restore ten-fold more 
to the soil in t^eir tops than they extract from it for their tubers. 
By the fact that he can utilize his entire land, and need let none 
lie fallow or waste, such a farmer economizes his manures, and 
makes it a -part of his system to restore to the soil, in manures, every 
part of its produce which is not sent to market in the form of 
butter, cheese, poultry, pork, and the like. The farmer of New 

* See American Eucyclopedia, Art. Agricultural Chemistry. 



256 ECONOMIC PHILOSOPHY. 

Jersey, with Philadelphia on his right and New York on his left, 
takes his choice of a thousand crops. The herder of South 
American pampas can not sell any grain, corn, or potatoes, and 
rarely even the flesh of his herds. He kills them, therefore, for 
their pelts and tallow, and leaves the meat for carrion. Of the 
price of his pelts and tallow in Liverpool, five thousand miles 
away, he pays nine-tenths as a transportation tax, and the other 
tenth supplies him with a plug of tobacco and a few pounds of 
sailor's hard tack each year, together with the satisfaction such 
a person will sometimes feel, in the thought that though he 
gets but little worth enjoying, what little he does get is imported, 
and must be, therefore, of the veiy best quality. 

102. Values of Land Due to the Consumers of 
Land. Products. — Demand being the cause of all value, 
it follows that the value of the farm lands, farm in- 
comes, farm products, and wages for farm labor, must depend 
upon the immediate presence of a population engaged in other 
pursuits than farming, and chiefly in manufactures and who 
ai'e, therefore, consumers of farm products. This has been well 
shown by Mr. J. R. Dodge, statistician of the American Depart- 
ment of Agriculture. He divides the States into four classes, with 
reference to their proportions of consumers to producers of farm 
products. All States having less than 30 per cent, of agricultural 
workers, and seven-tenths of whose population are in other in- 
dustries, are placed in the fii'st class. These ai'e necessarily distrib- 
uted among the most diverse kinds of industries, and are sub- 
jected to the greatest activity of the societary movement. 

All States having less than 50 per cent, of agriculturists and 
more than 30 are put in the second class. Those having more 
than 50 and less than 70 per cent, are placed in the third class ; 
and those having 70 per cent, and upwards of farmers are in the 
fourth. 

For instance, Virginia and Pennsylvania have nearly equal 
natural fertility, and essentially the same natural characteristics, 
stretching in the same way across the same chain of mountains 
from the Atlantic to the Great Valley of the Ohio River. 
Virginia in 1880 had 51.41 per cent., or a trifle more than half of 
her people engaged in agriculture. The value of her farm lands 
was $10.89 per acre. Pennsylvania, owing to her large mining 
and manufacturing, banknig, and i-ailroading, populations had 
only 21 per cent. of her workers employed in farming,and her farm- 
lands wei'e worth $4i).30 per acre. Qf course, her lands )iot de- 



WORKERS IN AGRICULTURE. 



257 



voted to farming, but to uses with which farming could not com- 
pete, were worth very much more. Even her mountain and timber 
lands, which in Virginia would be abandoned as waste, were 
made valuable by great populations seeking to utilize their ores, 
rocks, streams, and timber. 

Illinois had 43.65 per cent, of her workers in agriculture, and 
her farm lands were valued at $31.87 per acre. Iowa had '57.46 
per cent, of farmers, and her farm lands were worth $22.92 per 
acre. In the whole United States the result is as follows : 

TABLE NO. 1. 



Classes. 


No States and 
Territories. 


Acres. 


Value. 


Value 

per 
Acre. 


Per cent, 
of work- 
ers in ag- 
riculture. 


Ist Class 

2d Class 


15 
13 
13 
6 


77,250,742 
112,321,257 
237,873,040 
108,636,796 


$2,985,641,197 

3,430,915,677 

3,212,108,970 

562,434,843 


$38 05 

30 55 

13 53 

5 18 


18 
42 


3d Class 


58 


4th Class 


77 







In the diagram, page 259, Mr. Dodge exhibits the value per 
acre, of each class, as four pyramids combined upon one base, that 
stands for the entire volume of American industry. 

The diagram page 260 exhibits, in like manner, the relative 
values of farm incomes, in States where consumers of farmers' 
products preponderate over competitors in their production, as 
represented in the second table. 

That the values of space, in which to produce crops, are gauged 
accurately, according to the market value producible within such 
space, appears from the following, showing the value of the prod- 
ucts in the aggregate and per capita which gives rise to this 
higher value in the land. 

TABLE NO. 2. 











Proportion 


Classes. 


No. engaged in 


Value of Products 


Value per 


Woriiers in ag- 


Agriculture. 


of Agriculture. 


Capita. 


riculture, per 










cent. 


First Class 


1,060,681 


$484,770,797 


$457 


18 


Second Class. ... 


1,566,875 


616,850,959 


394 


42 


Third Class 


3,017,071 


786,081,420 


261 


58 


Fourth Class... 


2,024,966 


324,2.37,751 


160 


77 



That the value, both of the land, and its products, is determined 
by the demand for them, is shown by the fact that, though the 
land of Illinois and Iowa averages far better and more fertile by 
nature than that of New York, Pennsylvania, and New Jersey, 
yet the far-ming land, which in Iowa is worth only $22 per acre, 
rises in New York to $44.41 per acre, in Pennsylvania to $49.30 



258 EOONOMIO PlIILO SOPHY. 

per acre, and in New Jersey, a country of primeval rocks and sand, 
to $65.16 per acre. New Jersey lies between the two great cities 
of New York, embi*acing, with its suburbs, 4,000,000 people, and 
Philadelphia and suburbs, embracing more than a million more. 
This focuses upon New Jersey a demand for food nearly as intense 
as is felt m any part of Europe, and affords an inducement to the 
most intense cultivation of the soil. One hundred feet square of 
land, devoted to the culture of Gen. Jaqueminot or Princess Alice 
roses, may produce roses to the value of $8,000 per year, or at the 
rate of $32,000 per acre. These, however, could only find market 
near a center of population so large as to contain some persons 
who would think it not wasteful to expend $10,000 on the flowers 
for a single ball. Stx^awberries also can be produced in a manner 
to reap from a quarter acre of land a larger return, and expend 
upon it more labor and capital, also, than would often be ex 
pended upon or gathered from a quarter section in the Western 
States. Owing to the intensive system of agriculture thus 
practiced, land rises in fertility in the States where markets are 
near and high, instead of declining by exhaustion, as it 
usually does when farming spreads a little labor over large 
areas. 

The States of the fourth class include North Carolina, South 
Carolina, Georgia, Alabama and Mississippi, and have in all 
108,637,796 acres of farm lands. The proportion engaged in agri- 
culture is 77^Vioo percent., the balance being chiefly in tran- 
sportation, professional service, and trade, with very little manu- 
factures, mechanics, banking, or commerce. 

The social movement here is slow and stagnant. No large 
cities, capable of diversified or intense demand, exist. Indus- 
try, until twenty years ago, had been mostly carried on by forced 
labor, instead of under the inducement, to the workers, of either 
wages or profits. Through all these causes the average value of 
the farm lands is only $5.28 per acre. The low price of farm 
lands indicates that they are near to the margin of cultivation, 
and, in fact, vast quantities of land in these States lie unculti- 
vated, because they are far away from that demand which alone 
could give value to their products. And except as their products 
have value, no values can be reflected from their products upon 
their labor and land. 

In the second table we see that the product of agriculture per 
man falls as the percentage of persons engaged in agriculture 
rises. This is another way of saying that the product falls as the 




10 Ifj 



WorKers i/i all Indilstries. 
35 1^0 lis 50 k GO ds 70 



^ .^ 75 SO 8^ Op 9,5 



ijy uu 



DISTANT MARKETS. 261 

demand falls, for one who produces agricultural products, can not 
form any part of tlie demand for the products he produces. An 
extremely slight demand may arise on the part of those who con- 
fine themselves to producing one crop, for a crop which they do 
not produce, as the cotton planters of the South formerly thought 
it cheaper to buy the "hog and hominy " on which they fed their 
slaves, in Illinois. But the true market of the farmer is not 
reached except in the manufacturer, as the manufacturer's chief 
mai'ket is the farming population. Hence, the demand for the 
products of States of the fourth class is chiefly from 1,000 to 3,000 
miles from the point of production. 

In the manufacturing States, 1,060,000 farm workers get $484,- 
770,797 per annum for their products, while in the agricultural 
States 2,024,866 farm workers get for their products only $325,- 
099,388. Comparing the States which make up these four classes, 
we find the average value of production for each farmer and farm 
laborer is $431 for Pennsylvania, $501 in New Jersey, $467 in 
Illinois, $394 in Ohio, $376 in Minnesota, $199 in Kentucky, $180 
in Virginia, and $178 in Mississippi. If returns upon capital in- 
vested were considered, as a rule, those making the smallest re- 
turn to each worker would be found returning the largest per- 
centage on the capital invested. For where population is sparse, 
capital scarce, and the returns precarious, there capital is slow in 
being "turned over," but exacts a high rate of profit on each 
"turn over," or investment it gets, as labor also exacts a high 
wage in proportion to the value of its pi'oduct. Hence, rates of 
interest are high, the nominal rate of profit on capital is high, 
and wages ai'e high in the sparse districts, relatively to the value 
of the product, but as production is slow, when these rates of 
capital, interest, and wages are spread over a given period of time, 
instead of over a given value of pi'oduct, they become low, rela- 
tively to those prevailing in a country of more diversified activi- 
ties, where capital can be turned over oftener, where loans are 
better secured and more promptly paid, and where labor can be 
more continuously employed, and the value of its product, per 
year, is greater. 

The average rates of wages in the period of depression in 1879, 
and the normal rates of 1882, for the groups of States as hereto- 
fore classified, not only show the effect of unemployed labor in 
reducing prices, but present fairly the differences in the several 
groups, the distinctively agricultural class showing the lowest 
rate : 



262 



Economic philosophy. 

1882. 1879. 



CLASSES, j With Board. 



Without Board. With Board. 



Without Board. 



1st. 

2nd. 

3d. 

4th. 



$24.14 
23.51 
19.51 
13.67 



$15.10 
16.93 
13.04 
9.24 



$21.31 
21.13 
16 84 
12.01 



$13.10 
13.45 
11.03 
8.15 



The diagram opposite exhibits the relative rates of wages paid 
for farm labor in States having many consumers and few pro- 
ducers of farm products, compared with rates of wages in the 
same capacity in States where these conditions are reversed.* 

103. Machinery in Fanning-. — Intensive farming, as car- 
ried on near great markets, tends toward small farms fenced into 
small lots, and the expenditure of much labor over small areas, 
the use of many fertilizers, and the increase in the fertility of the 
land. Extensive farming, as carried on at a great distance from 
markets of consumption, tends toward the greater substitution of 
machinery for hand labor, and the cultivation of large tracts of 
land to one crop and under one ownership, and of fewer crops 
by one farmer. Finally, in Dakota, Wyoming, New Mexico, and 
parts of California, this system culminates in the great bonanza 
farms, where a life more like that of the factory, the mine, the 
fur-station, or the whale-ship, supersedes the home life of the 
farm. A large force of men are temporarily hired during the 
busy season, who, when that is over, leave the vast estate in the 
hands of a few resident keepers for the winter. Whether this 
feature of the bonanza farms is permanent or temporary it may 
yet be too early to predict. 

The chief method in all extensive farming is to till the largest 
area, at the greatest saving of labor, for the crop that will bear 
greatest transportation with least deduction fi^om its value. This 
necessity has given rise to the two classes of machinery in which 
the American inventors have won special eminence, viz., means 
of transportation and of rapid cultivation. 

The introduction of this new machinery in agriculture, has had 
the same economic effect in superseding hand labor, as it has 
had in the factories of Europe. In the census report of 1860, 
under the head of agriculture, attention was called to the fact 
that the inti'oduction of locomotives on railways had greatly in- 
creased the demand for horses, since in taking possession of the 

* Mr. Dodge has carried out the same comparison to the agricultural and manufac- 
turing counties in each State with like results. See "Farm and Factory," by J. R. 
Dodge. 



264 ECONOMIC PHILOSOPHY. 

larger routes of travel, on which it superseded the horse, it greatly 
multiplied the number of shorter routes on which horses are still 
necessary. But Mr. Moody is of the opinion * that should steam 
he successfully applied to common roads, and streets, and general 
farm work, it may yet supersede the horse instead of increasing 
the demand for him. 

The first patent issued in the United States after the organiza- 
tion of the patent office was in June 1797, to Charles Newbold, of 
Burlington, New Jersey, for a cast-iron plow which combined the 
mold-board share and land-side all in one casting. During the 
early part of the present century, however, the plow most in use 
was of wood, iron-shod, large, ill-shaped and cumbersome, drawn 
by fi'om one to six yoke of oxen, requiring one and often two 
men at the handles, another to ride on the beam to keep it in the 
ground, another to keep it clear, and several drivers for the oxen, 
often four and six, but never less than two, to turn one acre a day.f 
Successive improvements in the cast-iron plow were made in 1810 
by Josiah Ducher, of New York, in 1814 by Jethro Wood, of 
Scipio, New York, and in 1836 the implement was brought to a 
degree of perfection by Joel Nourse, of Worcester, Massachusetts, 
One man with a single horse will now plow two and a half acres 
in light soils, and with two horses, by means of the sulky attach- 
ment, will ride while driving, breaking two-and-a-half acres of 
prairie per day. With a gang plow one man and two horses will 
plow five acres a day, a saving as compared with our first example 
of ten men plowing one acre, amounting to forty-nine men out 
of fifty required to do the same work. One man, with a cultivator 
and a pair of hoi-ses, works one acre of corn per hour, whereas he 
would formerly, with a hoe, work half an acre in a long and hard 
day, thus saving the labor of nineteen-twentieths of the men form- 
erly required to cultivate corn. 

The first American patent for harvesting grain issued in May 
1803, to French and Hawkins, of New Jersey, was followed by 
mowers, cutters and threshers in endless number. In 1828, 
Samuel Lane, of Hallo well, Maine, patented a machine for cutting, 
gathering and threshing grain in one operation. The Hussey 
Machine, t in 1833, cut as fast as eight men could bind. In 1834, 
Cyrus H. McCormick, of Virginia, patented his first reaper for 
cutting grain of all kinds. In 1836, Moore & Haskell provided 

* " Land and Labor," by Wm. Godwin Moody, p. 17. t ibid. p. 20. 

% Obed nnssey, Cincinnati, Ohio. 



FARMING BY MACHINERY. 265 

one which would cut, thresh and winnow the grain at once. In 
1860 one man with four horses would cut twenty acres a day. Now 
machines are used whereby one man and team, travelling three 
miles per hour, will cut eighty acres in ten hours, or as much as 
could be done by 320 men with sickles. Formerly threshing out 
a few hundred bushels of grain, with a flail, would fill up a farmer's 
leisure days throughout the winter. Now the steam thresher 
threshes, winnows and sacks the grain as fast as twelve or 
fifteen men can feed the machines and clear away the straw — 
turning out 1,000 to 1,500 bushels a, day. In California, machines 
are used which find the grain standing, and leave it in sacks, com- 
bining the cutting, threshing and winnowing in one operation, 
and putting it in sacks in another. Formerly men took the 
ripened ear of Indian corn from the stalk by hand and husked. 
Now a machine drawn by two horses picks off the ear, gathering 
all the ears whether the stalks stand up or are bent down, husks 
as fast as eight men, leaves all the husks on the stalk, and does 
not pull up or cut up or break down the stalks. Forty years ago, 
by scraping an ear of Indian corn across the end of a shovel, on 
which the worker was sitting, he would shell from five to twenty 
bushels a day. Now two men, with a cornsheller, shell twenty- 
four bushels an hour, or with the three classes of horse-power 
shellers, four men will shell 1,500, 2,000 and 3,000 bushels per day 
respectively ; one man doing the work of 75, 100 or 150 men. 
Formerly the farmer paid a toll of an eighth or a tenth to get his 
grain ground. Now the mills run so automatically, that little 
more than a watcher at night with his lantern is needed, and 
the cost per bushel is hardly appreciable. 

104. Effects of Releasing- Liabor by Machinery. — A vast 
force of persons are thus released from the labor of producing 
food, for one is enabled to produce as much as scores can consume. 
Some persons see, in these facts, a reason for alleged stagnations 
in industry and increased difficulty in obtaining employment.* 
But before rushing passionately to such a conclusion, there should 
be a very careful analysis of the fact that formerly nearly every 
person's occupation had to do almost directly with the visible 
creation of food, clothing or shelter. Now vast numbers of indus- 
tries, employing millions of persons in all, are not directly, and 
many are not even indirectly, connected with either of these. In 
the United States half a million persons are creating transporta- 

* Jloody on " Land and Labor," p. 30. 



266 ECONOMIC PHILOSOPHY. 

tion by railway, an employment which sixty years ago did not 
exist. A vast number more are creating intelligence through 
books and newspapers, a large daily newspaper involving each 
day some part of the time of 1,000 persons. Hardly did such an 
occupation then exist. Others by thousands are creating pianos, 
organs and other musical instruments, an occupation which did 
not then exist. Others are making works of art, especially photo- 
graphs, electrotypes, chromos and cartoons — furnishing people 
with insurance against every known calamity, and indemnifying 
widows and oi'phans against ]Decuniary loss by the death of those 
on whom they are dependent. Others are transmitting intelli- 
gence by electricity, tending power looms, constructing public 
parks, making matches. India-rubber articles, gutta percha, cellu- 
loid, and a thousand things then unknown, from materials not 
then discovered. Others are obtaining petroleum and refining it, 
or collecting and transmitting instantaneously to Washington 
the data from which the weather bureau determines what the 
weather will be, forty-eight hours ahead, in all parts of the 
countiy. 

With such a vast and complicated army of new femployments, 
and with the visible spectacle before us hourly of almost our 
entire population, young and old, poor and rich, able and infirm, 
working steadily all the time, and at least as industi-iously as be- 
fore these labor-saving appliances were introduced, it would be a 
rash generalization to say that the means of employment had in 
any degree lessened. In fact it accords far more consistently 
with the incessant industry we continue to see among all classes 
and conditions of men, to revert to the well-known law, heretofore 
referred to, that the satisfaction of a lower want only begets the 
desire for not merely one, but for many, higher waats. If the 
wants of mankind multiply in geometrical ratio, in proportion 
as they are satisfied in arithmetical ratio, if as our wants are 
met, our ambitions expand, how is it possible to base a theory 
of the suspension of employment, for any human being, on an 
increase, however great, in the multiplication of the means of 
satisfaction ? 

It is supposed that the quantity of sewing, which ladies now put 
upon their gowns and other apparel, has been multiplied in a 
degree fully equal to the increased economy with which the same 
amount of sewing can now be done by the machine. Meanwhile, 
however, millions of persons have found employment in the new 
industries connected with the manufacture and trade in sewing 



WOEK FOE ALL. 267 

machines. So, relatively to the absence ,of all means of transport 
tation formerly existing, the manufacture of iron and steel for 
railways, of cars and locomotives, is a new industry. 

So the vast increase in the quantities of paper, furs, silks, plate 
glass, watches, jewelry, bijouterie, books, furniture, capacious 
residences, oil paintings and higher engravings, standard libraries, 
and the like, involve an immeasurable increase in the need for 
human labor. Moreover they minister to enjoyments of a kind 
to which few could then aspire, but which are now open to the 
millions 'without reserve. 

By reason of the cheapness, with v^hich this extensive introduc- 
tion of machinery has enabled American farmers to produce agri- 
cultural products, the sophistry is sometimes indulged in, by poli- 
ticians, that dear human labor can underwork cheap human 
labor. American agricultural products, in the production of 
which dear human labor participates, do undersell European 
agricultural products, which are almost wholly produced by 
cheap human labor, unaided by machinery. In many parts of 
Europe, and even in parts of Great Britain, wheat is still planted 
by hand-sowing and reaped witli a sickle. This competition is 
not however between dear and cheap human labor, but between 
human labor kept dear by the utilization of machinery, or per- 
haps between machinery itself, and cheap labor. 

105. Tenant Farms and Large Holdings in America. 
— The census of 1880 showed that of a total of 4,008,907 farms in 
the United States, 1,024,701, or more than one in four, were ten- 
ant farms. Estimating the number to have increased with the 
subsequent growth of population to one and one-quarter millions, 
it far outnuinbers the total number of holdings in Great Britain 
and Ireland, which now amount to 1,069,827. From 1870 to 1880 
also the number of farms containing over 500 and less than 1,000 
acres grew from 15,873 to 75,973, and the number containing 
more than 1,000 acres rose from 3,720 to 28,578. Simultaneously 
with this tendency toward large farming, and as a part of it, 
there has been an apj)lication of very large capitals to farming, 
not merely in the purchase of agricultural implements adapted to 
extensive tillage, but in a general elevation of the breeds of sheep, 
horses, and cows by the substitution of the best English blooded 
stock for the mongrel breeds. The tendency during this decade 
was to make blooded stocks very general, whereas, previously, 
they had been the hobby of a few only of the more aristocratic 
farmers, who were looked upon as farmmg more for taste and 



268 ECONOMIC PHILOSOPHT. 

pleasure than for profits. Farmers generally have awakened to a 
keen sense of the fact that the blooded stocks are hy far the more 
profitable, and that large capitals can nowhere be used more 
profitably than in their dissemination. 

Mr. Moody has written a fervid and denunciatory book ; * re- 
sembling in its rhetorical intemperance Mr. George's attacks 
upon land tenure,! Mr. Hudson's assault on railways, | Mr. Lock- 
wood's indictment against the office of President,! and similar 
zealous productions. All these serve to mark that crude state of 
economic and political incandescence, in which our intellectual 
fuel expends itself with more of heat and smoke than of illumi- 
nation. Mr. Moody would have us believe that the tendency 
towards large farms and tenant farming indicates a revival of 
villeinage, serfdom, and slavery, a view that is in harmony with 
his previously enunciated doctrines concerning the effect of the 
factory system and of machinery. The working of land, and the 
stock and capital necessary to run it, upon equal shares by labor 
is, however, usually a contract that is equitable to both parties. 
Mr. Moody, like many philanthropic men who treat economic 
subjects emotionally, mistakes the poverty, from which this form 
of contract is the tenant's best avenue of escape, for a poverty 
which the contract produces and perpetuates. § Permission, to a 
man wholly without any fruits of past labor in his possession, to 
enter into possession of all the fruits of another's labor, of land 
which he has cleared, fenced, drained, ditched, supplied with 
orchards, implements, seeds, cattle, and herds, and by his labor 
to earn a title to half the profits which result, cannot be con- 
strued into cruelty successfully, so long as men retain the facul- 
ties essential to common sense. The fact, that in America tenants 
pay half the crop (or from one to two thirds), while in England 
rent is based on the proportion of a fourth of the crop, instead of 
establishing the case of hardship against the American tenant 
which Mr. Moody contends, shows simply that in countries of 
large capitals the value of capital declines relatively to that of 
labor, and that large landholders, holding many farms or estates 
for rental, are under the same economic necessity to rent them 



* "Land and Labor," by Wm. Godwin Moody, 
t " Progress and Poverty— Social Problems— Ttie Land Question." 
X " The Railways and the Republic," by James T. Hudson. 
II "Abolition of the Presidency," ))y Henry C. Lock wood. 

§" The Displacement of Labor by Improvements in Machinery," by Wm. Godwin 
Moody. 



BONANZA FARMING. 269 

low, as large money lenders are to lend at a lower rate of interest 
than small money lenders, as large manufacturers are to manu- 
factui^e at a lower cost, as large carriers, by land or sea, are to 
carry at lower rates per ton per mile, etc. * 

At the Cass, Cheney, and Alton farms near Fargo in Dakota, 
290 men at the highest in summer, and six or eight in winter, 
working with thirteen seeders, thirty self -bin ding harvesters, and 
five straw-burning steam threshers for the Cass farm (6,355 acres), 
and with nineteen seeders, twenty-six self -binding harvesters, and 
four straw-burning steam threshers for" the Cheney farm* (5, 200 
acres), and with the same ratio of implements for the Alton farm 
(4,000 acres), are able to till, in wheat, 10,477 acres, lying contigu- 
ously, and to produce therefrom twenty-two bushels per acre, at a 
cost of about sixteen cents per bushel, and for a return of from 
seventy to ninety cents per bushel. The crop brings $161,065.80, 
of which four-fifths are profit, It is contrary to every sound 
principle of political economy to weep, wail, or indulge in de- 
nunciatory epithets, over the substitution of economies like these 
for the old methods of producing wheat, which maintain its 

* NUMBER OF TENANT FARMS IN THE UNITED STATES Br CENSUS OF 1880. 

Money Share Money Share 

Bent. Rent. Rent. Rent. 

Alabama ,22,888 40,761 Missouri 19,843 39,029 

Arkansas 9,916 19,272 Montana 17 ' 63 

Arizona. 42 59 Nebraska 1,943 9,476 

California 3,209 3,915 Nevada 63 73 

Colorado 165 419 New Hampshire 1,237 1,378 

Connecticut 1,920 1,206 New Jersey 3,608 4^830 

Dakota 72 606 New Mexico '33 '386 

Delaware 511 3,197 New York 18,124 21,748 

District of Columbia 150 60 North Carolina 8,G44 44,078 

Florida 3,543 3,692 Ohio 14',834 32I793 

Georgia 18,557 43,618 Oregon 748 1,538 

^^^o 33 57 Pennsylvania 17,049 28,273 

Illinois 20,620 59,624 Rhode Island 939 '047 

Indiana 8,582 37,468 South Carolina 21,974 25,245 

Iowa 8,421 35,753 Tennessee 19,266 37 930 

Kansas 4,438 18,213 Texas 12,'o89 5.3I379 

Kentucky 16,824 27,203 Utah 60 '373 

Louisiana 6,669 10,337 Vermont 2,164 2,598 

Maine 1,628 1,153 Virginia 13,392 21,594 

Maryland 3,878 8,661 Washington 209 262 

Massachusetts 2,293 848 West Virginia... 4,292 7,700 

Michigan 5,015 10,396 Wisconsin 3^719 8^440 

Minnesota 1,251 7,202 Wyoming '5 ' g 

Missiseippi 17,440 37,118 " 

United States 322,357 702,244 



270 ECONOMIC PHIL SOPHY. 

average cost at seventy cents. These farms are small compared 
with those of Dr. Glenn of California, who annually shipped to 
Liverpool wheat worth $1,000,000 a year in his own ships. On 
the Thompson and Kendall farm (Dakota), 1,600 acres of wheat, 
accurately estimated, involved a cost for production per acre of 
$8.69, and left a profit (in a selling price of seventy cents per 
bushel) of forty -nine cents per bushel, or $7.84 per acre, or $12,- 
544 for the 1,600 acres, producing only sixteen bushels per acre. 

The economic value of these instances consists in the emphatic 
denial they afford to any general theories that the rate of profits 
on air industries are at any time lower than in previous epochs, 
or that they evince any general and universal tendency to de- 
cline. All such theories must be confined to specific cases or to 
single industries ; but it must always be implied that, at other 
places, or in other industries, new wells of profit are gushing 
forth at the old rate of several hundred or several thousand per 
cent. , so that the average inducement to the human family, as a 
whole, to move forward to new fields of endeavor and of fortune- 
making, remains an essentially constant quantity. The Grandin, 
Dalrymple, and Glenn farms will, in a few years, have sunk to 
seven per cent, profits per annum, but the same rate per cent, 
will have broken out afresh, perhaps, in Borneo or in Tartary, 

Measured merely by acres, the great land-holdings in the 
United States far exceed those in Great Britain,* and while some 
of our own large holdings t will be broken up, yet, so long as large 

* SIZE OF ALL ENGLISH LAND-HOLDINGS OF MORE THAN 50,000 ACRES. 

Names of Owners. Names of Oiuners. 

Marquis of Ailesbury 55,051 Lord Londesborough 52,655 

Duke of Beaufort 51,085 Earl of Lonsdale 67,950 

Bedford 87,507 Duke of Northumberland 191,480 

Earl of Brownlow 57,799 Duke of Portland 55,859 

" Carlisle 78,540 Earl of Powis 64,095 

" Cawdor .51,538 Duke of Rutland 70,039 

Duke of Cleveland 106,650 Lady Willoughby 59,912 

Earl of Derby 56,598 Sir W. W. Wynn 91,033 

Duke of Devonshire 148,629 Earl of Yarborough 55,370 

Lord Leconfield 66,101 

t Says Moody, "Land and Labor in United States," p. 88: "But in the United 
States we have a saw maker, in Philadelphia, with his four million acres ; two butch- 
ers in California with their eight hundred thousand and more acres ; a cattle raiser in 
New Mexico with his seven hundred and fifty thousand acres ; and numbers of them 
in Texas whose acres are counted by hundreds of thousands. In the great Northwest 
the land-holdings for agricultural purposes — for grain, grass, and vegetables — by hun- 
dreds, range to fifty thouband acres and upwards, occupied by tenants or machinery, or 
by both. The whole country, from the Mississippi to the Pacific, is dotted — no, they 



FARM LABORERS. 271 

capitals can make the large rates of profit incident to ' ' bonanza " 
farming' which is above pointed out, the tendency to large hold- 
ings will increase. The objection urged to these large holdings 
is that they tend to differentiate society into capitalistic and 
proletariat grades, to "make the rich richer and the poor poorer'' 
to ci'eate dominant or master classes On the one side and servile, 
landless, and dependent classes on the other. This objection ap- 
plies, however, in the same sense to the advance from the hunter 
life to that of the herdsman. For, in hunting, there is no aristoc- 
racy of noble lords, who own the bows and arrows, and servile 
slaves who carry them. But, the instant herding begins, there 
are those who own the flocks and those who tend them. Still 
herding is less unequalizing than tilling the soil, for with this 
comes in the wide distinction between those who own the soil and 
those who do not. Most usually, in early periods, the former own 
the latter. Yet the inequalities created by agriculture are less 
than those created by trade and manufactures — for now society 
grades from millionaires to beggars. Thus, with each advance 
of society in activity, there is a continually increasing differentia- 
tion in ranks and gi*ades of power, but it does not follow that the 
poor grow poorer at either of these advances, for it may happen 
that this increasing inequality is only an inequality in the degree 
in which all rise, but that none actually descend. This depends 
on whether the pauper and criminal, confessedly the lowest ranks 
in civilized life, are below or above what they would be in savage 
life. The real question is not whether the hired worker on a 
bonanza farm is better off than an independent farmer on a New 
England farm, for he may have neither the training nor capacity 
to be the latter. Men can be used, on the bonanza farms, of a 
training and capacity in farming far inferior to those which would 
be essential in a good Middle State farmer. But inferior men 
need a race in life, and an opportunity to live, as well as superior 
men. The real question is, whether the class of men who now 
hire on the bonanza farms, would be doing better if this employ- 
ment were denied them. They are not profit-sharers, they do 
not bring their families — do not make permanent homes on the 
farms, and are less permanent than factory hands, as these are 
usually induced to stay if they will. But the fact that they seek 



are not dots— is patched with these huge holdings. In comparison with the monopoly 
of the lands here shown, that of the English landlords appears quite insignificant. And 
yet we are only in the third decade of our movement." 



272 ECONOMIC PHIL080PHT. 

this employment, at the wages offered, iudicates that, relatively to 
any other field of labor open to them, it is the best.* 

106. Large and Small Laiid-Holding iu England. — The 

" Democratic Federation " of England, a leading socialist organi- 
zation, says, in its manifesto : ' ' Thirty thousand persons own 
the land of Great Britain . against the thirty millions that are 
suffered to exist therein." Like erroneous statements on this 
point are frequently made. The census of 1883 shows in England 
958,800 owners of land distributed as follows, t The landed aris- 
tocracy, all told, number 5,000 owners, and have a rent-roll of 
£30,000,000 annually out of a total rent-roll for all the land 
owners of England of £99,000,000, thus making the aristocracy 
the owners of less than a third of the rent-roll of England. Next 
to the aristocracy come 133,800 smaller rural proprietors, made 
up as follows, viz. : 4,800 owners with estates that average 700 
acres, then come 32,000 with estates that average 200 acres, then 
25,000 with estates that average 70 acres, and then 72,000 with 
estates that average 20 acres. All of these 133,800 rural proprie- 
tors enjoy a rent-roll amounting to £33,000,000, or one-tenth more 
than that of the aristocracy. Finally there come the urban pro- 
prietors, owning less than a fourth of an acre (four city lots) and 
suburban proprietors owning less than four acres, which two 
classes combined number 820,000 owners, and have an aggregate 
rent-roll of £36,000,000, or one-fifth more than the aristocracy. 
The landed proprietors are thus seen to have two classes of owners 
below the aristocracy, either of which, if property were repre- 
sented in the House of Lords exactly according to its value, could 
outvote that aristocracy, which is now exclusively represented iu 
the House of Lords. Rather the House of Lords consists of mem- 
bers of a class, comprising one-third of the land-owners in value, 
assuming to represent the other two-thirds. 

While the total annual income of all the people of England is 
£1,300,000, 000, the amount distributed in wages to the ' ' workers " 
in the proper sense is, according to Mr. GiflSn, £800,000,000. To 
workers who had less than £150 per year per family, according 
to Mr. Giffin, £620,000,000, according to Prof. Leoni Levi £450,- 



* On the Grandin farm (Dakota), besides board, the wages are, from November Ist to 
March 3l8t, $15 per month; from April Ist to April 30th, $18; from May Ist to July 31 3t, 
$16; from August 1st to August 15th, $2 per day; from August 16th to September 15th, 
$1.50 per day; from September 16th to October Slst, $18per month. (Moody on "Land 
and Labor," p. 47.) 

•|- Mallock, " Property and Progress," p. 215. 



WAGBS AND INCOME. 273 

000,000, and according to Mr. Hyndman, socialist, £300,000,000. 
Taking the estimate made by Mr. Giffin, £800,000,000, as cor- 
rect, and we see a division between wages-workers on the one 
hand and all other classes combined on the other nearly equal. 
This is strikingly in harmony with the facts indicated in our chap- 
ters on Profits, and on Capital, as to the rates of division between 
capital and labor in the United States. It may yet be found to 
be a general law that labor and capital never effect so even a 
division of their joint product, between the owners of all the capi- 
tal and the workers, or that labor never works so nearly " at the 
halves," as when the division is wholly unintentional. 

The custody of the reproductive capital is so distributed that, 
according to Mulhall, 2,046,900 families of the upper and middle 
classes possess together property to the value of £7,562,000,000; 
but of these 222,500 families own £5,728,000,000. Averaging the 
first total over the larger number and they have £3,700 per 
family. Averaged over the smaller number they have £26,000 
per family. Meanwhile there are 4,629,000 families which own 
only £398,000,000, or less than £90 per family. But while the 
average amount of capital owned by a working class family in 
England is only £86, the average income of the family is £100, 
or about 112 per cent, on its capital, the average income of those 
.who have a thousand pounds is £260, or twenty-six per cent, on 
their total capital, and the average income of those who have 
£26,000 is £1,500, or about five per cent, on their capital. Thus 
the annual income of the rich is one-seventeenth of their wealth, 
the income of tlie middle class is one-quarter, and that of the 
working poor is ten or twelve per cent, more than the value of 
what they own. 

Mr. Mallock * presents the following curious fact : In 1851 the 
gross income of the country was £620,000,000, of which the in- 
comes of the rich (those having incomes of more than £150) were 
£200,000,000. To-day the gross amount of incomes under £100 is 
£620,000,000, whereas in 1843 they were £235,000,000, showing 
an increase of £385,000,000, or of £185,000,000 more than the 
total income of the richer classes in 1843. In other words, says 
Mallock, ' ' the poorer classes to-day, are as a body, in precisely 
the same situation as they would have been in if at the time of the 



* " Property and Progress," by W. H. Mallock, p. 179. 

* " Property and Progress," p. 219. 



274 ECONOMIC PHILOSOPHY. 

first exhibition the income of every rich man then in the country 
had been made over to them in perpetuity." 

Tliese figures, of Mr. Mallock, may grow partly out of a more 
perfect or different mode of taking the census in later than in 
earlier years, or out of an expansion in the volume of currency 
"whereby the same values are measured by larger numbers. The 
fact that the population of England has remained so nearly sta- 
tionary, and that, notwithstanding the immense efforts made by 
its government, bankers, merchants, manufacturers, and in some 
cases its armies, to hold its foreign trade, the migx'ation nearly 
equals the difference between its birth and death rate, does not 
quite bear out Mr. Mallock's argument.* Still, as it seems to be 
based on statistics honestly and intelligently handled, the student 
is entitled to the result and will make his own allowance for 
Mr. Mallock's supposed optimism. 

107. Liaiicl In Ireland. — The causes of the depopulation of 
Ireland need a more careful analysis than can here be given, but 
the effects of that event upon land tenure and cultivation are ap- 
propriate in this chapter. In 1846 the population of Ireland was 
over 9, 000, 000, t and in 1883 it is slightly more than 4, 500, 000. | In 
1841 there were 310,375 cotter holdings (tenancies) of under five 
acres ; in 1861 there were 88, 083 ; and in 1880 there were but 64,292. 
Here were 246,083 small farms extinguished as homes, which must 
have contained at least one million, and probably nearer two mill- 
ions, of people, w^hose labor had, in the main, reclaimed them 
from moor and waste. That neither the tenant system, nor the 
absentee landlords, were the cause of the depopulation of Ireland 
seems indicated by the fact that in the jjeriod from 1780 to 1810 
Ireland had both, and yet grew in population from 5,000,000 to 
8,000,000. In 1851, in a return which purported to distinguish 
"arable" land from "uncultivated," there were returned as 
" arable " 14,802,581 acres. In 1871 and 1881 the returns were as 
follows : 

1871. 1881. 

Under crops, including meadow and Acres. Acres. 

grass, 10,071,285 10,075,424 

Grass or pasture, .... 5,621,437 5,195,375 

Bog, waste and water, . . . 4,289,432 4,708,047 



* The population in 1846 was 28,002,094, and in 1851 it was 27,393, 337. 
t A M. Sullivan in Nineteenth Century for July, 1883. 
X Mr. Sullivan says about 5,000,000. 



DECLINE OF IRELAND. 275 

The average yearly acreage under oats, between 1851 and 1860, 
had been 3,074,381 acres. In 1881 it had fallen to 1,392,365. 
Wheat acreage, in the like period, fell from 460,802 acres to 154,- 
009 ; barley from 221,150 to 210,152 ; turnips from 378,482 to 340,- 
097 ; potatoes from 1,039, 921 to 854, 294. Cabbage, alone, increased 
by 318 acres, and flax by 20,969. Cattle increased from 3,480,623, 
in 1851-60, to 3,954,479, an increase of 473,856. Sheep decreased 
from 3,297,971 to 3,258,583, a decrease of 29,388. Pigs fell off from 
1,194,303 to 1,088,041, a decrease of 106,262. Horses decreased 
from 572,219 to 547,662, a dechne of 24,557. The value of stock, 
in the hands of farmers holding less than five acres, had, in 1841, 
been £14,771,483 ; by 1846 it was probably £6,000,000, and in 1851 
it had fallen to £1,002,156. Between 1871 and 1881, 418,615 acres 
went back, fi'om pasture and tillage combined, to moor and waste, 
and yet these were regarded as the fat years of Irish husbandry, 
owing to the relief afforded by the Land Act of 1871. Had the 
census afforded careful returns of the land remitted to bog and 
waste in previous years, there is no doubt that it would have 
been quite as large, and we think it would prove to be largest in 
the years when the decline in population was largest, viz. , from 
1846 to 1857. The depopulation of Ireland has not been arrested, 
or even checked. And there is no reason to believe that the 
pressure upon the means of subsistence diminishes as the popula- 
tion lessens, since the means of subsistence are all the product of 
land and labor conjointly. As the quantity of labor declines, the 
quantity of labor av^ailable for cultivation of the land declines, by 
means of which the quantity of cultivated land, and of consumers, 
also declines. The fei'tility of the land, declining with the supply 
of labor, points to no relief from the mere policy of depopulation. 
• 108. EvoliitionofCultivatedPlants as Sources of Food. 
— A large part of the increase in the fruitfulness of the earth in 
modern, as compared with ancient epochs, arises from the greater 
number of plants and animals made available for human food, 
and for the manufacture of clothing and habitations, in the later 
periods. Nor does it yet appear that the end of this source of in- 
creased production has been reached. China, Egypt, and the 
table lands of Mexico, Central America, and Peru, are known to 
have been the three independent centres of cultivation from 
whence many, or most, cultivated plants and flowers have origi- 
nated.* Of these, the wonderful vegetable resources of China 

* " Origin of Cultivated Plants," De Candolle, p. 19. 



276 ECONOMIC PHILOSOPHY. 

remain almost unknown to us, though our ambassadors thei'e 
are served with dinners in thirty courses, consisting of grains and 
fruits, many of which have never been brought to our Western 
world. 

In China, 2,700 years before Christ, the Emperor Chen Ming 
instituted a ceremony at which, every year, five species of useful 
plants are sown — rice, sweet potatoes, wheat, and two kinds of 
millet. In Egypt, in the Pyramid of Gizeh, which dates from 
1,500 to 4,200 years before the Christian Era, figs are cut in stone. 
In Mexico and Peru maize, tobacco, potato, and the sweet potato, 
date back probably 2, 000 years. In China the records, known as 
Pent-sao, written in our Middle Ages, state that Chang-Kien, 
during the reign of the Emperor Wu-Ti, in the second century 
before the Christian Era, returned from a mission to the nations 
of Western Asia, bringing with him to China the bean, the 
cucumber, the lucern, the safi'ron, the sesame, the walnut, the 
pea, spinach, water-melon, and other Western plants previously 
unknown to the Chinese. Wheat precedes civilization, or his- 
tory, from Japan to the Canary Islands, throughout Asia, Africa, 
and Europe, and is shown to be older than all existing languages, 
by having a different name in each of the very oldest. The com- 
mon notion, however, that a species of modern wheat called 
mummy w^heat is derived from seeds of wheat found in the sar- 
cophagi of the mummies is denied by De Candolle. Barley was 
nearly as widely known as wheat. Cotton originated in India, 
though a species is also believed to have been native in Mexico. 
It was brought by Alexander from India, but its cultivation was so 
neglected by the ancients as to be again brought into Europe by 
the Arabs, and in the tenth century it passed into China, and its 
extensive cultivation in China and India preceded its use or cul- 
tivation in Western Asia or Europe. 

The peanut is believed to have been native of Brazil, and to 
have been carried thence, in the fifteenth century, into India. 
Neither the ancients nor the Crusaders knew of coflFee or tea, 
though coffee was native in Abyssinia and Arabia from the earli- 
est periods, and tea was abundant in China from 3,700 B. C. It 
was hardly known in Europe two centuries ago. Its utility in 
superseding wine and strong drinks is strongly indicated by the 
fact that, though the vine and grams flourish in China, wines and 



* " Origin of Cultivated Plants," p. 362. 



GROWTH OF FOOD SUPPLY. 277 

liquors are almost unknown and unused. Flax was cultivated 
by the ancient Egyptians and Hebrews, and hence flax and its 
product (linen) are frequently mentioned in the Old Testament 
and on the monuments. The sumac is native throughout the 
Mediterranean and Caspian region, whence it has been imported 
into America. Indigo was native, probably, in India, but seems 
to grow wild in many parts of Asia. It dates back, in Egypt, 
only to the Middle Ages, and is believed not to have been iden- 
tical with the plant from wliich the Mexicans extracted their blue 
dyes. Throughout North America, to the Isthmus, the Indians 
smoked tobacco in pipes, and in most parts of South America 
they chewed and took snuff before the arrival of the Europeans 
made this plant known to the latter. Hemp, known in China 
and India 500 years before Christ, was not known to the ancient 
Egyptians or Hebrews, and yet was known to the early Scyth- 
ians, who brought it with them from Asia and Russia about 1,500 
B. C, and before the Trojan War. It is wild in Siberia, Southern 
and Central Russia, and the Caucasus. Sugar was unknown to 
the Hebrews of the Bible period, as well as to the Egyptians, 
Greeks, and Romans, as a commercial product, though it was 
first cultivated in Southern Asia, and was brought by the Arabs 
into Egypt, Sicily, and the South of Spain. The hop extends 
from Germany to the Caspian, and Eastern Siberia, as a wild 
and native plant, but the Greeks and Latins were almost entirely 
ignorant of the use of beer as a bevei'age, and it appeared in En- 
gland only in the reign of Henry VIII. The orange originated 
in China and Cochin, with a probable extension by seed into 
India, but was only brought into Europe, by the Portuguese, in 
the fifteenth century. Citrons, lemons, shaddocks, and manda- 
rins, have the same origin. The vine grows wild in all the coun- 
tries contiguous to the Mediterranean, Black, and Caspian seas, 
whence it passed into China about 132 B. C. The strawberry was 
not known as a cultivated plant to the Greeks, Romans, Egyp- 
tians, or Hebrews, though as a casual wild berry its habitat prob- 
ably covered most of Europe and America. Cherries and plums 
were known to the ancients, and cherry-stones were found in the 
lake dwellings of Bourget. Apricots have their home in Western 
Asia, and China, where they were known two or three thousand 
years before the Christian Era. The almond grows from Persia 
to the Mediterranean, and was known to the Hebrews, Greeks, 
and Romans, the latter calling it the Greek nut. The peach was 
cultivated in China from the remotest antiquity, and appeared in 



278 ECONOMIC PHILOSOPHY. 

Europe at about the date of the Christian Era. The pear is men- 
tioned by Homer, and has its habitat throughout Europe, and 
eastward to Persia. Tlae lake dwellers of Switzerland and Italy 
gathered wild apples abundantly, and with them some pears. The 
pre-historic area of the wild apple extends from the Caspian Sea 
nearly to Europe, and forests of sweet wild apples have been 
seen in the region between Trebizond and Ghilan. It is not 
known in Siberia. The quince has the same habitat as the apple. 
The Greeks regarded the quince as a sacred fruit, which would 
preserve from evil spirits, and Solon prescribed its use in connec- 
tion with the mai-riage rite. The pomegranate has its home in 
Persia, and was familiar to all the cultured races. Wliile wheat, 
barley, rice and millet are very ancient grains, rye and oats are 
very modern, originating among the Thracians, Germans, and 
Russians. Pumpkins originated in Mexico, Brazil, and South 
America. Melons originated in Central Africa, and on the Nile 
and Niger ; water-melons were known to the ancient Egyptians. 
They were also independently cultivated in Asia. Cucumbers 
have been cultivated in India for three thousand years, in China 
from the second century before Christ, and by the ancient 
Greeks. The olive grows from the Punjaub in India to tlie Ma- 
deira Islands, and was one of the fruits best known to the 
Hebrews. It has, however, no Sanscrit name, and hence has 
reached India at a recent date from Western Asia. Peppers, cap- 
sicum, tomatoes, and cactus are all American. The fig is native 
in the Mediterranean basin, from Syria to the Canaries, and was, 
of course, familiar to the ancients, and only recently known in 
Eastern Asia. The date-palm exists, from pre-historic times, 
from Senegal to the Indus. 

The banana is native in India and Southern Asia, though Hum- 
boldt contended that it was native also in America. Pliny men- 
tions it, but the ancient Egyptians and Hebrews did not know of 
it. Certain' varieties of peas, beans, soy, lentils, cai-rot, ground- 
nut, or similar leguminous plants, are pre-historical in the Medi- 
terranean basin, where the garden pea was cultivated by the lake 
dwellers of Switzei'land, while other varieties extend over Africa, 
and still others originate in China and Japan. The garden pea 
was not, however, known in ancient Egypt or India, though the 
chick pea was common to ancient Egypt, Greece, and India. 
Buckwheat is native in the Himalayas, and came into Europe in the 
Middle Ages through Tartary and Russia, and is first mentioned in 
Germany in 1436. Chestnuts, of the Italian varieties, foi'm occa- 



FOODS MULTIPLY. 279 

sional natural forests from the Caspian Sea to Portugal, while the 
American and Japanese varieties have each its independent habi- 
tat. Millet, rice, and sorghum are of Chinese and Indian origin , and 
were not known to the Hebrews, ancient Egyptians, and Romans, 
though millet reached the cave-dwellers of Switzerland probably 
by way of Thrace and the Caspian, while rice became known to 
the Greeks through Alexander's expedition, and began to be cul- 
tivated in Egj^pt about 100 B. C. Maize, Indian coi-n, though 
called " Turkish wheat " in most of the European languages, is 
purely American, as is also the bird which is graced with a 
Turkish name throughout America and Europe. Maize was a 
leading staple of native agriculture, at the period of the discovery, 
from the Valley of the La Plata to Canada. The poppy is native 
around the Mediteri-anean, and was familiar as a medicament to 
the early Greeks and Egyptians, though the latter did not culti- 
vate it, nor is it mentioned in the Bible. Recently its cultivation 
has become extensive in India and China. The castor-oil bean is 
found in the Egyptian tombs, was of course known from an 
early period, and grows wild in Tropical Africa. The cocoanut- 
palm, now extensively gi'owing in Africa, was brought there 
from Western South America, and the islands of the Pacific, and 
the Indian Archipelago. The beet root was used as a vegetable, 
from the Canary Islands to the Caspian, three or four centuries 
before the Christian Era, but is not mentioned by the Hebrews, 
and was of slight importance, until made a means of obtaining 
sugar in France, in 1815-35. Clover, red, white, and yellow, 
grows wild from Spain to the Caspian, and was known to the 
ancients, but was not cultivated until the fifteenth and sixteenth 
centuries, when the Protestants expelled from Spain carried it 
into Germany. 

Out of 247 species classified as to their origin by Candolle, the 
old world has furnished 199, America 45, and 3 are still uncertain. 
The United States, notwithstanding its fertility, only originates 
the Jerusalem artichoke and the gourds. Forty -four species only 
are very ancient or prehistoric, but among these many, like tea, 
reached Europe latest. De Candolle says, " The original distribu- 
tion of cultivated species was very unequal. It had no pi'oportion 
with the needs of man or the extent of territory." 

The system of cultivating grasses and roots, as the food of ani- 
mals who in turn become the food of men, and the consequent 
evolution in the quantity of flesh and muscular power obtained 
in cultivated animals, by means of the increased supplies of food 



280 ECONOMIC PHIL SO PHY. 

produced for tliem by human labor, is another chief cause of in- 
crease in the earth's capacity to maintain a dense population. 
Our fat stock shows consist of oxen developed by human labor 
and art to three or four fold the size which they attain in a wild 
state, of sheep whose fleece has risen from three pounds to an 
average of twelve pounds, and occasional instances of thirty -five 
and even fifty-three pounds. Although the chief of the cultivated 
species of plants and animals were old at some one locality in the 
world 3,000 years ago, to all other localities they were new until 
Avithin one or two centuries. Thus maize, the sweet potato, buck- 
wheat, rye, bananas, were all old in their several habitats, but 
the world of Socrates, Seneca, and Plato knew nothing of them. 



CHAPTER VIII. 

LABOR. 

109. Definition of Labor. — No word would seem to be 
more definite or easily defined than labor, and yet few so suc- 
cessfully elude definition. If we say it is " buman effort put 
forth to obtain means of subsistence, " we are met by the objec- 
tion that this definition includes something- more than labor, viz., 
the exchange, which the laborer, makes of the compensation re- 
ceived for his labor, for the means of subsistence. Most kinds of 
labor are not direct effort put forth to obtain means of subsis- 
tence, i. e., the labor per se without exchange does not obtain any 
means of subsistence. One who feeds or drives an engine for a 
day labors directly only to keep the engine moving by means 
of the effect of the steam supplied by his fuel on the piston rod. 
The act has no direct relation to the means of subsistence of the 
laborer. On the other hand, two men may be fishing side by 
side. The sportsman in catching his fish intends to have it 
cooked for his own repast, and therefore, as far as food are means 
of subsistence, he is putting forth effort directly to obtain means 
of subsistence. Yet this is not to him labor, but strictly and 
merely sport or play — as purely as if lie were playing chess or 
base-ball. By his side, however, in a fishing smack, is a man 
who makes a business of fishing, and who does not intend tocon- 
smne the fish he catches, but to sell them. To him the same 
process of fishing is labor. Therefore, effort put forth to obtain 
means of subsistence is not always labor, and labor is not always 
effort put forth to obtain means of subsistence. 

Yet, to make efi^ort laboi-, it is not necessary that the worker 
shall sell his services, or their product. A farmer labors when 
he toils to fence his farm, which he expects never to sell. It 
must have the motive of necessity, and is usually combined with 
the idea of x^hysical exertion. But a burglar who breaks into 
one's house at night, to carry away gold or plate, does not labor, 
though he combines great physical exertion with the hope of 
gain ; for crime, however much toil and gain it may involve, is 



282 ECONOMIC PHILOSOPHY. 

not labor. But when the burglar is sent to prison, though he 

works without hope of gaining through his work, that is labor.* 

If we say it is effort put forth in production, or in producing 



* C. S. Devas, " Groundwork of Economics," § 53, says : " The term labor or 
work {labor, ergasia, travail, arbeit) is not easy to define. But this is no excuse for 
those who leave it altogether undefined, nor for Mill, who leaves it obscure. He says 
(Pol. Econ., Bk. i., ch. i., § 1) that it is ' either bodily or mental, muscular or ner- 
vous, and that it is necessary to include in the idea, not solely the exertion itself, but 
all feelings of a disagreeable kind, all bodily inconvenience, or mental annoyance con- 
nected with the employment of one's thoui^ht or muscles, or both, in a particular occu- 
pation.' This leaves us in the dark as to whether that plowman labors whose plowing 
is a pleasure to him, and whether playing is laboring, not to speak of this description 
of labor being applicable to the action of those wlio weep around a tomb, a stronger 
use of the term. Adam Smith is vague. McOiilloch defines labor ' as any sort of ac- 
tion or operation, v.-hether performed by man, the lower animals, machinery, or natural 
agents, that tends to bring about any desirable result.' But this is to distort ordinary 
language, and to turn men into machines, without any gain, that I can see, for the pur- 
pose of economics. To say labor, in 'political economy,' is only that exertion that 
demands something for itself in exchange (Perry), in its obvious sense, excludes the ex- 
ertions of slaves for their master, and of self-sufficing peasants for themselves and their 
famUies. To define it the exercise of any human faculty for a definite object (H earn) 
would turn all play into work. To limit it to human activity directed towards the acqui- 
sition or preservation of property, is nearer the mark, but too narrow ; for all unpaid 
exertions, literary, artistic, political, religious, would be evidently excluded, and too 
obscure, for a judge who performed his office for the sake of his pay would or would 
not be laboring, according as we understand the word " directed " to apply to the end 
of the operator {finis operantis) or to the end of the operation {Unis operis). 

" It is best, I think, to look only to the end of the operation, and to define labor as hu- 
man action, of which the proper end, or natural purpose, is some good external to itself. 
Thus, whenever the action in itself gives a reward to the agent, it is not labor. So none 
of the natural functions of the body, as eating ; so no recreation, though it entail the 
greatest exertion, as hunting; or though to the given individual it may be most un 
pleasant, as a tiresome banquet. Conversely, whenever the reward is not in the action 
itself, this is labor, as the tilling of laud, whether by the peasant with joy, or the hire- 
ling with sorrow ; and the action of the night porter, though it be mainly to sit motion- 
less ; and of the boatman, though the same physical act of rowing when doue by the 
holiday maker at his side is not labor ; for the end of rowing, when done by a holiday 
maker, is different when done by a hired boatman. . , . 

" The best solution of the problem, how to classify labor, seems to me to begin by 
discarding the terms, productive and unproductive, as misleading and unnecessary, and 
then not to divide labor according to its results, for these are too vague aud disputable, 
but, rather, accoraing to the proper object, purpose, or end of the particular operation 
(finis opei'is). According to this principle of division, four kiuda of labor can be dis- 
tinguished, industrial, public, ministerial, and predatory, having as their end, the first, 
production ; the second, some function of government ; the third, some personal ser- 
vice (ministration) ; the fourth, the unlawful acquisition of others' property. Under 
industrial labor would come that bestowed on agricuUure, manufactures, and com- 
merce ; under public labor, that of the civil and military service in the widest sense, 
from the highest to the lowest ; under ministerial labor, that of the clergy and teachers, 
of literary and scientific men, of the legal and medical profession, of musicians, actors, 
and the like ; under predatory labor, that of thieves, smugglers, pirates, false coiners, 
common usurers, and the like." 



LABOR ELUDES DEFLNITLON. 283 

commodities, this is no definition, unless we have first defined 
commodities and production. Even then it would be incorrect, 
as labor may be employed to destroy as well as to produce. When 
the Turks captured Constantinople, they proceeded to virtually 
destroy the Church of St. Sophia, as a temple of Christian art, 
adorned with statues, images, and i)aintings, by covering them 
all with a plain white wall, underneath which, in the Mosque of 
Omar, they are supposed still to remain. The toil of those who 
had created these statues and images would hardly be called labor 
by most persons, because it was art, and it has not been usual to 
call fine art labor, even where it is constructive of commodities of 
great value. But the toil of those who covered up these statues 
was certainly labor, and would have been equally so if they had 
been employed to break them up into paving-stones. Its effect 
was destructive, as to the objects of art, though, in the belief of 
the Turks, it was constructive of a higher form of temple for re- 
ligious worship. 

If a man carries mortar from the street to the roof of a build- 
ing in a hod, that is certainly labor, if he is free and is working 
for wages. If be is a slave, being himself capital, it would seem 
that his work must also be capital, since it is only for his work, 
as the end, that he is himself owned, as the implement. If he 
bi-ings a horse, rope and pulley, and lifts the mortar by horse 
power, charging for the hire of horse, rope and pulley, sitting 
still himself, is he now charging for his own labor, or for the use 
of capital ? But if his capital can labor, dispensing with his own 
work, will the charge he gets be interest on capital, wages of 
labor, profits of enterprise, advantage of monopoly, or premium 
on idleness ? And if capital invested in machinery can be said 
to perform labor, as when it grinds flour, or draws trains of cars, 
why does it not equally labor when it takes other equally efficient 
forms, such as sailing ships, nets for catching fish, implements of 
all kinds, including money ? And if implements labor, then 
land itself, being the chief of implements, is the chief of laborers, 
and to speak of land and labor, is to add a part to the whole. If 
labor is capital when it works fi'om fear of the lash, how is its 
nature changed when it works from fear of starvation ? And if 
working from fear converts labor into capital, why is not a man 
who works, from fear that he cannot pay a note, capital ? 

It was not wholly from oversight that Adam Smith avoided 
economic definitions. Exceedingly comprehensive terms, like 
matter, force, time, and space, that can be easily apprehended 



284 ECONOMIC PHILOSOPHY. 

without definitions, become mysterious in proportion to their sim- 
plicity when we attempt to define them. Metaphysicians prove 
that matter is only force, and that force is only matter, but when 
no metaphysician is around, a child can tell force from matter 
unerringly and without difficulty. Yet the word labor has a 
meaning-, and possibly the difficulty of defining it correctly aiises 
from the sentimental objection we have to remember that labor 
has sprung from slavery, and in trying to designate the child we 
have omitted the surname which connects it with its origin, 
which is servile. Labor is servile e&.ovi—i. e., effort that would 
not be put fortii for the intrinsic pleasure of the effort, but solely 
because such circumstances exist, that one man feels constrained 
to serve another. This is why the expenditure of effort in art, 
science, sport, statesmanship, crime, enterprise, eloquence, or re- 
ligion, is not labor. But work by the convict, or slave, though 
performed without hope of the reward, through mere constraint, 
is labor. We are not fashioning these instances to fit an eco- 
nomic purpose, but are simply evolving the true meaning of the 
word labor from its envh-onment, since it may contain an im- 
portant economic result. 

1 10. Work Differs from Labor. — When effort is divested 
of the servile, consti-ained, or necessitous idea, and is performed 
to satisfy an innate passion, the term used, both in common 
speech and throughout literature, changes from ' ' labor " to 
" work." * Men say of such an one, " he works for the love of 
it," but it becomes awkward to say he " labors from the desire to 
laboi'." The terms, "love's labor lost," and " labor of love," are 
now used to express something done under the compulsion of a 
moral or passional coercion, which would otherwise be undone. 
An autlior's writings are his " works," so far as tliey are written 
from artistic motives ; but when, as in the case of Sir Walter 
Scott, an author is involved in bankruptcy to a large amount, 
and sits down deliberately to write a " Life of Napoleon," to pay 



* Cyras Elder, in " Man and Labor," p. 96, says : " Man, like other animals, and in a 
higher degree than the other animals, because more richl}' endowed with innate im- 
pulses to vaiious labors than all of them, is naturally a toorker ; he is not naturally a 
tramp or a loafer." 

Mr. Elder here shifts the term from labor to work, as he was obliged to do by a sense 
of literary exactness, which forbids that aman or animal working from innate impulse 
should be said to labar. Even an engine works when it runs smoothly. It labors when 
it is obstructed, or is unequal to the task. A ship in a heavy sea labors. The lightest 
adaptation of means to ends, even a political plan, " works like a charm." Think of 
one who should say of the Homestead Act, " It labors like a charm." 



LABOR SERVILE. 285 

off his creditors, he is said, also, to "labor" on this portion of 
his works. 

The economic reason why labor shall not, and can not in most 
cases, consist of services which it is a pleasure to perform, is, first,' 
that many of the tasks required to be performed for the support 
of man are not of a kind intrinsically pleasurable to any body ; 
secondly, those who perform the labor can not by any possibility 
get the pleasure which their labor is designed to subserve (the 
miner of coal, for instance, can not make digging coal under 
ground delightful, because somewhere else a cheerful parlor will 
be warmed and lighted by the coal) ; and, thirdly, if all labor were 
pleasureable in itself, labor-capacity would expend itself wastefully 
upon the first labor that offers, whereas labor j)ower needs to be 
carefully economised and saved, for those forms of labor only for 
which there is a social demand or need, and this social need can 
only be determined by the willingness of those who are in need 
to make a return effort, or to pay for the effort expended. Hence 
the economic use of labor-force requires that no labor shall be per- 
formed except as it is paid for, since it is the fact that pay can be 
got for it that is the index that points out the ulterior fact that it 
is needed . In this way, as we have seen in our chapter on ' 'Value, " 
demand steers labor, and inertia, or the indisposition to labor, 
except as we are paid for it, economises labor-force, so as to ensure 
the expenditure of it where needed, and nowhere else. It is a 
delight to Gladstone to chop down trees, but if it were a delight 
to all men to do so there would be no trees left. Chopping down 
trees must be made irksome to the mass of mankind, in order to 
limit the expenditure of human force in this way to cases wherein 
a tree needs to be chopped down, and to ensure, then, an adequate 
reward in wages to those who perform the task. The ultimate 
economic necessity that labor should be irksome consists in the 
necessity of economizing human effort. For we all see that Avith 
nearly the whole population of the globe working actively during 
all their waking hours, and with all enjoyable commodities tend- 
ing irresistibl}^ toward their proper consumers, and all ultimately 
consumed, and the consumption of each limited by nature so that 
he can not if he would consume more than his share, and Avith 
the like economic necessity that all the surplus of enjoyable 
wealth that any one man gets, over what he can consume, shall 
be invested in some foi^m of reproductive wealth, and that the sole 
function of this reproductive wealth shall always be to promote 
the production of consumable wealth, and to forward it to its 



286 ECONOMIC PHILOSOPHY. 

consumei's, i. e., with every economic law working toward 
equality in the distribution of consumable commodities, and with 
all these consumed, and with all human effort economized by be- 
ing expended only where it is paid for, there is still none too large 
a supply of commodities and services for the world. Obviously, 
therefore, if there were less economy of effort, as there certainly 
would be if all effort was pleasurable, there would be a less 
aggregate of comfort. 

In the psychological nature of man, it is further necessary that 
economic effort or labor shall be painful in order that the alter- 
native to those efforts which result in dispersing and expenditure 
shall be pleasurable, and it is necessary that the dispersion of 
wealth shall be rewarded by pleasures which do not attend its 
accumulation, or mankind would not, after toiling to accumulate, 
also toil to disperse it, as we constantly see them doing in enlarg- 
ing their scale of expenditure, multiplying their wants with every 
addition to their income, buying parks, country seats, yachts, 
pictui'es, traveling in foreign lands, sojourning at watering 
places, etc. Those, therefore, are in error who assume that all 
labor should be pleasurable and passionate, as Plato, Fourier, 
and the socialists generally have done, and as some who repudiate 
socialism as a creed still fall into from what they deem to be 
proper moral sentiment.* Only that form of effort to which man 
has some aversion is labor, and only his aversion to it causes him 
to economise his effort by confining it to remunerative effort, and 
only by confining it to remunerative effort can he be sure that he 
is working in a line for which there is social demand, and only 
by working in the line of social demand can he be really useful. 
Hence aversion to labor has both a basis in human nature, and 
an outcome of social utility. 

111. All Labor can Not be Agreeable. — Having defined 
labor as servile, constrained, or necessitous effort, it next becomes 
necessary to recognize the fact that the necessity does not proceed 



* Cyrus Elder, in " Man and Labor," p. 28, says : 

" It can not be that man has a natural aversion to labor, nor can It be true of that 
peculiar kind of man called by the political economists a working-man. Somebody or 
something is to blame if labor has lost its natural delight. If this be true, we may ask 
in the language of the great mother, 

" ' Who his drugged my boy's cup ? 
Who has mixed my boy's bread ? 
Who with sadness and madness 
!Ias tuniod the man-child's hca:?'" 



ZABOE 18 IRKSOMK 287 

from the mere coercion of the strong over the weak, but from the 
inherent economy of nature which intends, and plans, that man- 
kind shall live only by rendering mutual services to each other, 
including many of the most painful, disgusting, unhealthy, 
sliocking, and disagreeable kind. In compact city life, dead ofPal 
and excrement must be removed, and the more puti'id, offensive, 
and even unhealthy it is, the greater the social necessity of 
removing it. Loathsome, contagious, and malignant diseases 
such as yellow fever must be treated at the risk of one's life, and, 
the more fatal or loathsome they are, the greater the social neces- 
sity for their treatment. The dead must be buried, the sick, 
insane, and paupers must be cared for, criminals must be arrested 
and punished, even if need be to the death penalty, bad passions 
and base propensities must be met and reformed, or restrained by 
the coercive force of law. The differences that arise in society 
from conflicts of interest must be adjusted in the courts, and occa- 
sionally wars must be resorted to for the settlement of disputed 
questions between great masses of people or different races. 

To pei'form all these functions well, there niust be an organiza- 
tion of industry, a differentiation of function, and a subdivision 
of labor whereby each individual shall become the atom or mole- 
cule, the grain of flbrine or the particle of gluten, as it were, in the 
more comprehensive individual, called society. Division of labor 
implies the continuing, by each individual, in one mode ©faction, 
until the purpose of society is accomplished. The same atom of 
iron can not be, at once, a cog in the driving-wheel and a rivet in 
the boiler. If transferred from one of these places to the other, 
the wheel breaks or the boiler bursts. So in the organization of 
man in industry, the same person can not, at the same time, act as 
shoe-maker, school-teacher, farmer, and lawyer. To the extent 
that he attempts to do so, he disorganizes the machine, and indus- 
try refuses to make use of him. But while the organization of 
industry requires him to do one thing, or class of things only, in 
order to be productive to society, the psychological constitution 
of his mind requires that he shall find much of his pleasure in tran- 
sition from one thing to another. These two demands can not 
often be met at the same time, and hence arises a division of most 
men's time into business hours and hours of leisure, or working- 
hours and hours of rest, or, economically, the time we sell to 
others for pay, and the time we reserve to ourselves for pleasure. 

The sale of our time to others, whereby they become entitled 
to claim or compel from us the performance of acts which would 



288 ECONOMIC PHILOSOPHY. 

be intrinsically unwelcome and disagreeable, if we were not paid 
to perform them, is what is generally understood by labor. The 
payment for labor-time generally, is usually called wages ; * the 



* Adam Smith (" Wealth of Nations." Book i, ch. viii, p. 29) assumes an " original 
state of things " to have subsisted when the laborer got the whole produce of his labor, 
a state of things which historically never existed. He says: "The produce of labor 
constitutes the natural recompense or wages of labor. In that original state of things, 
which precedes both the appropriation of land and the accumulation of stock, the whole 
produce of labor belongs to the laborer. He has neither landlord nor master to share 
with him." 

So far is this from being true,the history of labor opens either with tribal communism 
in which the produce of labor belongs to the tribe, or with slavery, in which the laborer 
himself is owued. He continues : 

" But this original state of things, in which the laborer enjoyed the whole produce of 
his own labor, could not last beyona the first introduction of the appropriation of land 
and the accumulation of stock. 

"As soon as land becomes private property, the landlord demands a share of almost 
all the produce which the laborer can either raise or collect from it." The fact is that no 
labor that is appropriative, as hunting and fishing, is done upon land uutU the land itsel f 
has first been appropriated. Then the landlord works his land with such help as he 
needs, at first owning his workers, until ownership is gradually softened into wages. 

Smith assumes that the farmer's profit then comes in as a second deduction from the 
produce of labor, and the wages of labor are what is left of the produce of labor after 
paying the landlord's rent and the farmer's profit. In fact, however, the hired labor of 
a country does not first produce and then submit to a robbery, after the manner sup- 
posed by Smith. It is the man who has something, not the man who is destitute, that 
marks out work to be done, furnishes implements, and sets the idle man at work. 

Roscher ("Pol. Econ." by Lawler,Vol. i, p. 137) does not define labor, but in dividing it 
treats it as synonymous with industry. He says: "The best division of economic 
labor is the following : 

"(a) Discoveries and inventions. 

"(6) Occupation of the spontaneous gifts of nature, as, for instance, of wild plants, 
wild animals, and of minerals (appropriation). Where this is the only kind of economic 
labor, man is necessarily dependent on nature in a high degree. 

"(c) The production of raw materials; that is, a direction given to nature in order to 
the production of raw materials by stock-raising, agriculture, forest culture, etc., but 
not by mining. 

^\d) The transformation (verarbeitung) of raw material by means of manufactories, 
factories, the trades, etc. 

"(e) The distribution of shares of goods among those who are to use them directly, 
whether from people to people, or from place to place (\vholesale), or among the indi- 
viduals of the same place (retail). To this class also belong leasing, renting, loan- 
ing, etc. 

"(/) Services in the more limited sense of the term which embrace personal as well 
as incorporeal goods. As for instance the labors of the doctor, teacher, virtuoso, of 
the statesman, judge, and of preachers, whose office it is by way of eminence to pro- 
duce and preserve the immaterial wealth known as the state and the church." Eoscher, 
however, is greatly in error in saying: " The order followed in the above classification 
is that in which the different classes of labor are wont to be historically developed." He 
wholly omits the industry in which all other industries begin, viz., fighting, and subdu- 
ing. The soldier, medicine-man or conjuror, and priest, are the first organizers <■{' 
industry. The first product sought is security from the enemy. The first source of 



NAMES FOR WAGES. 289 

wage paid for a specific act is sometimes called a fee. If 
the time and service paid for is associated with official rank, high 
social service, skill, responsibility, and dignity, the wage is called 



life is the lance. The first form of surplus wealth is in amulets and charms to drive 
away evil spirits. But he is right in placing appropriation before production. 

In savage life a man owns whatever he can appropriate. In civilized life a thief, by 
taking what he can lay his hands on, simply declares his preference for savage life over 
civilized. 

J. R. McCuUoch, in his notes to Adam Smith, p. 435, defines labor as " any sort of 
action or operation, whether performed by man, the lower animals, machinery, or 
natural agents, that tends to bring about any desirable result. In so far, however, as 
it is done by natural agents it has no value." The last statement is not altogether true. 
The first man to invent a wind-mill got, as profits, the whole difference between the cost 
of grinding the corn by the power previously in use, and the cost of grinding it by wind 
power. It was only as wind-mills were multiplied that his profits were reduced to the 
ordinary rates of interest on the capital invested in the mill. The gratuitousness of 
new natural agents is a gratuitous fallacy. Ths first rates of transportation by steam 
were graduated on those by sail. So far as steam was cheaper the engine owner made 
a profit. The first rates of transmission by telegraph were graduated according to what 
the companies thought the public would pay rather than send by mail. Capital em- 
ployed in using natural agents for the first time, does not at once, and while it has a 
monopoly, come down for its profiis to current rates of interest on capital. 

H. D. MacLeod (" Principles of Econ. Phil.," Vol. i, p. 273) says: " If the money be 
paid for personal services, it is called wages, or salary, or pay, or fees, according to the 
different species of service." 

Mill (Book i, Ch. i, § 2) says : " Labor is always and solely employed in putting ob- 
jects in motion; it can only create utilities and not substances, and it is productive 
when it results in bringing into existence a commodity, and unproductive when it only 
gives rise to an emotion or pleasure." 

Jewns (" Theory of Pol. Econ.," p. 183) says: " Labor is any painful exertion under- 
gone partly or wholly with a view to future good. The amount of labor is a quantity 
of two dimensions— intensity and time. Quoting Adam Smith's definition, Adam Smith 
said: "The real price of every thing, what every thing really costs to the man who wants 

to acquire it, is the toil and trouble of acquiring it Labor was the first price, 

the original purchase money, that was paid for all things." Mr.Jevons says; "This 
celebrated passage might not prove to be so entirely true as it would at first sight seem 
to most readers to be." 

Mr. (7a?'«2/ (" Social Science Condensed," by McKean, p. 90) points out that both 
Smith and McCulloch begin by asserting that labor is the sole source of all value, and 
then proceed to say that man can fence in a water-fall and by his monopoly get pay 
for its gratuitous services, thus making monopoly a source of value as well as labor. 

Ricardo (Works by McCulloch, p. 50) says: " Labor, like all other things which are 
purchased and sold, and which may be increased or diminished in quantity, has its 
natural and its market price. The natural price of labor is that price which is neces- 
sary to enable the laborers one with another to subsist and perpetuate their race with- 
out either increase or diminution. 

" It is when the market price of labor exceeds its natural price that the condition of 
the laborer is flourishing and happy, that he has it in his power to command a greater 
proportion of the necessaries and enjoyments of life, and therefore rear a healthy and 
numerous family. When, however, by the encouragement which high wages give to 
the increase of poptilation, the number of laborers is iucreased, wages again fall to their 
natural price, and indeed from a reaction sometimes fall below it." 



290 ECONOMIC PHILOSOPHY. 

salary. If the wage for service rendered is blended with a profit, 
and is made contingent upon a risk, it is a commission. If the labor 
is expended in the production of an article like a patent, book, or 
copyright, of which capital and enterprise incur the risks and 
take the profits, subject to compensation to the author or inventor 
for his labor by a percentage on the sales, its pay is called a royalty. 
If the labor is performed by the means of capital of others loaned 
to it for the purpose, and is paid for by an equal share in the 
profits, it is called profit-sharing or working on shares. 

112. Labor Less Broad than Production. — Labor must 
not be confounded with production nor with industry. Produc- 
tion is the work of the employer of labor, since it is his act of 
employment that produces the labor. What the laborer produces 
is a diversion of a certain quantum of wages to himself in return 
for a certain quantum of services to his employer. The contract 
assumes that the employer is engaged in producing a commodity 
or a result, be it a railroad or a pin, and that in the course of that 
work of production he pays a definite sum for the service, i. e. , 
the obedient physical and mental action of the laborer, the em- 
ployer usually furnishing subsistence, implements, working s]jace, 
raw materials, job, associates essential to the division of labor, 
machinery, and marketing the product at his own risk as to 
whether the commodity is in demand or will pay any return 
whatever. 

Industry comprehends the grand total of employer and em- 
ployed, space, capital, contract, machinery, competing supply, 
demand, wages, and every other element bearing on the two 
parties, employer and employee. 

1 13. Tlie Wage Fund Doctrine. — It is hard to be sure what 
certain economic writers have meant by what they call the wages 
fund.* A usual mode of stating it is to say that the rate of wages 

* Mr. Cairnes ('' Some Leading Principles, etc.," p. 159) quptea Mr. Mill as stating the 
wages-fund doctrine (" Principles of Political Economy," Book ii, Ch. xi) thus: 
" Wages, then, depend mainly upon the demand and supply of labor; or, as it is often 
expressed, on the proportion between population and capital. By population is here 
meant the number only of the laboring class, or rather of those who work for hire; 
and by capital, only circulating capital, and not even the whole of that, but the part 
which is expended in the direct purchase of labor. To this, however, must be added 
all funds which, witnout forming a part of capital, are paid in exchange for labor, such 
as the wages of soldiers, domestic servants, and all other unproductive laborers. There 
is, unfortunately, no mode of expressing by one familiar term the aggregate of what 
may be called the wages-fund of a country; and as the wages of productive labor form 
nearly the whole of that fund, it is usual to overlook the smaller and less important 
part and to eay that wages depend on population and capital. It will be convenient to 



AMUSING DULLNHSB. 291 

is the quotient arrived at by dividing the whole sum applicable 
to the purchase of labor among the whole number who find em- 
ployment. Of course it is. But so is the price of wheat per bushel 
the quotient arrived at by dividing the whole number of dollars, 
applicable to the purchase of wheat, among the whole number of 
bushels actually sold. Yet we do not sujDpose that this truism 
in arithmetic is a proposition of an}' kind in economics, or that it 
gives rise to a wheat fund. 

The price of any quality of dry goods, per yard, is the quotient 
which would be arrived at by dividing the whole sum of money 
applicable to the purchase of that quality of dry goods, among 
the whole number of yards pui'chased. Does this give rise to a 
dry goods fund ? And so of rent, railway freights, and so on 
throughout the whole range of prices. 

If a boy were asked the distance from where he was standing 
to the next town, and should answer, "That, sir, is the quotient 
which may be arrived at by aggregating all the instances of like 
distance, which exist in the world, and then dividing it by the 
total number of distances so aggregated, " it would require a per- 
son extremely deficient in humor to fail to see that he was joking. 
And yet Mr. Mill seems to be not in the least conscious that he is 
joking, when he says the average rate of wages is arrived at, by 

employ this expression, remembering, however, to consider it as Ciliptical, and not as a 
literal statement of the entire truth." * 

Upon the above, Cairnes says: "As I understand this passage, it embraces the follow- 
ing statement: First, ' wages-fund ' is a general term, used, in the absence of any other 
more familiar, to express the aggregate of all wages at any given time in possession of 
the laborina; population; second, on the proportion of this fund to the number of the 
laboring population depends at any given time the average rate of wages; third, the 
amount of the fund is determined by the amount of the general wealth which is applied 
to the direct purchase of labor, whether with a view to productive or to unproductive 
employment." 

And yet Mr. Cairnes, on p. 161, defines the wages-fund in a very different way. He 
there says: " It seems to me that Mr. Brassey has mistaken the statement of the prob- 
lem for its solution. It needs no proof surely to see that if £40,000,000 be added to the 
exisiing capital of a country, and the greater portion applied to the direct purchase of 
labor, the 8u])ply of labor and other things continuing the same, wages must rise, or 
that the withdrawal of a great sum from the payment of wages, as on the occasion of a 
commercial collapse, must on the other hand, ceteris paribus, involve a fall of VFages. 
To us this is not to solve the question, but to state it. What we want to know is what 
determines the relation of supply and demand— of the wages-fund to the laboring popu- 
lation. Why is that relation such as to yield one rate of wages in the United States, 
another rate in Great Britain, and a third rate on the continent of Europe? If Mr. 
Braesey would fairly address himself to this problem, I think he would find that the 
political economy of the wages question is not quite so simple as he supposes." 
(" Some Leading Principles," etc., p. 161 ) 

* "Labor,'' i). 84. 



292 ECONOMIC PHILOSOPHY. 

dividing the total sum expended on labor, among the total number 
of laborers. 

Mr. Mill's doctrine was attacked by Mr. Thornton on the ground 
that the alleged wage fund, to be of any value in economics, must be 
a determinate sum, i. e. , we must be able to know first in the case of 
an individual employer, and then in the aggregate cases of all 
employers, how much money, if any, had been set apart in 
advance for the payment of wages, for if it was a wholly indeter- 
minable abstraction it was of no use. Mr. Mill gravely yielded 
to the validity of Mr. Thornton's objection. But neither gentle- 
man seemed to see the broad humor which renders the whole 
proposition on an exact level with the schoolboy's plan for find- 
ing the distance between two points, viz. : guess how much four 
times the distance would be, and then quarter it. 

Political economy can never make raj^id progress in England, 
until missionaries of humor are sent into that country, to incul- 
cate, or in some way develop there, the faculty of apprehending 
the distinction between stupidity and profundity. Malthus' law 
of population, as stated both by himself and Ricardo, illustrates 
the same point. The law is, that as the laborer's income expands, 
his power and tendency to procreate expands at the same rate, so 
as to hold the laborer, ordinarily and naturally, down to the same 
standard as if his wages had not been raised. Now, if an English- 
man had any sense of humor, he would see that there is no 
physiological distinction between the effect of an increase of 
income on a laborer, a profit-maker, and a landlord, as to 
his tendencies to procreate his species, as they are all laborers of 
some sort. Hence, if A. T. Stewart married on an income of say 
$1,000 a year, or say $500 each for himself and wife, the so-called 
law of Malthus would have required when his income reached 
$6,000,000 a year that Mrs. Stewart should have borne him 12,000 
children. In fact she did not bear him one. Yet Englishmen 
like Bon amy Price keep on declaring that the Malthus Law has 
to do with Political Economy, when it is only a form of uncon- 
sciouo liumor, designed to enable persons to be most amusing 
when they imagine they are most authoritative. 

When Mr. Cairnes, however, says that the object, of a wages 
fund doctrine is to explain why wages are higher in the United 
States than in Great Britain, and higher in Great Britain than on 
some parts of the continent, it immediately bfecomes evident that 
the word ' ' fund " has no business in the title, and that what we 
are searching for is the cause of the rate of wages. 



THE CAUSE OF WAGES. 293 

114. The Rate of Wages and Margin of Profits.— Tlie 
natural price of labor, and the actual rate of wages, is that price 
at which the employer, if he is a profit-maker {entrepreneur) 
believes he will find it more profitable to pay the wage, than to 
lose tlie cliance of pi'ofit by dispensing witli the service. The 
motive, which determines the employment, is tlie same as deter- 
mines the price in buying land or goods. If it be said tliat this 
definition runs in a circle, and that what it needs to set forth is 
the cause why the profit-maker pays more in America than in 
England, the ready and true answer is that the difPerence between 
cost of production and price of commodities is greater, and, 
"profits being the mother of wages," the larger the mother the 
larger the offspring. And if it be said that we are still defining 
in a circle, and that what is needed to be known is why the profits 
are larger, we answer because all profits grow out of an economy 
of human effort in effecting the maximum of consumable wealth 
at the minimum of human exhaustion, and that this economy is 
so facilitated in the United States by the union of the highest 
intelligence with the most untiring industry, in the application 
of the greatest diversity of occupations to the evolution of the 
products of the most abundant areas of fertile land, that more 
human comfort is created, per head of population, than elsewhere 
exists. The smaller the effort by which comforts are created and 
enjoyed, and the higher the standard of comfort attained, the 
higher must be the rates of profit and wages, since what we call 
profits and wages are only comforts expressed in the anterior 
form of the money which will buy them. Hence it is the success 
of industry, or of the war whereby man overcomes nature, that 
makes high profits and high wages, the division of the gross re- 
tvirns of each industry between capital and labor maintaining 
always that essential equality which we have pointed out in our 
chapter on " Profits and Loss. " 

It is believed that the average rates of profit on capital, in all 
countries, periods, and modes of business, bear about the same 
ratio to the wages of labor in the same countries, periods, and 
modes of business, 

McCullocli says :* "The common and ordinary rate of wages 
in any country really depends upon the magnitude of that por- 
tion of its capital which is appropriated to the payment of wages, 
compared with the number of its laborers." But what does the 

* Note to Smith's " Wealth of Nations," p. 30. 



294 . ECONOMIC PHILOSOPHY. 

magnitude of the sum to be appropriated to the payment of wages 
depend upon ? The appropriation is in all cases made by the 
profit-maker, and always with an eye single to the profit he can 
make. Hence the total sum appropriated to pay wages is not the 
cause of the rate of wages ; it is the wages itself in their totality. 
Hence the cause of wages is profits.* But the cause of rent, of 
interest, and of all production is also profits. Hence profits are 
the one equalizing standard of value into which all other modes 
of income known to political economy are exchangeable. Wages, 
rent, and interest are all modes of profit, the first being a profit 
on the rendering of service or the performance of labor, the sec- 
ond being a profit on the ownership of land or the capital invested 
in its purchase, and the third being a profit on the loan of money. 
All profits tend constantly toward an equality of return on past 
efforts, but an inequality and exorbitance of return on all new 
efforts which achieve a larger measure of satisfaction to human 
desires from a smaller expenditure of effort. Hence profits are 
the migratory or steering principle in industry, whose guidance, 
rent, interest, and wages all await and follow. Profits impel to 
the great inventions, discoveries, innovatioiis, economies, improve- 
ments. They are the pillar of cloud by day and of fire by night 
in the onward march of industry. They keep breaking out in 
the most unexpected spots, and perpetually surprising the world. 



* Adam Smith so faintly recognizes as almost to conceal the most important fact 
connected with the wages system, viz., that wages are due to and vary with profits. He 
says (p. 38) : "The liberal reward of labor, therefore, as it is the necessary effect, so it 
is the natural symptom of increasing national wealth. The scanty maintenance of the 
laboring poor, on the other hand, is the natural symptom that things are at a stand, aud 
their starving condition that they are going fast backwards." 

Gen. Francis A. Walker (," The Wages Question," pp. 129-130) hag clearly enunciated 
the relation of profits to wages. He says : " If a person have wealth, that of 
itself constitutes no reason at all to him why he should expend any portion of it on 
labor, on machinery, or on materials. It is only as he sees that he can increase that 
wealth through production that the impulse to employ it in those directions is felt. 
But for the profits by which he hopes thus to increase his store it would be alike easier 
and safer for liim to keep his wealth at rest than to put it in motion for the benefit of 
others." ... So long as additional profits are to be made by the employment of 
additional labor, so long a sufficient reason for production exists ; wlien profit is no 
longer expected, the reason for production ceases. At this point the mere fact that the 
employer has capital at his command no more constitutes a reason why he should use 
it in production wliere he can get no profits than the fact that the laborer has legs and 
arms constitutes a reason why he should work when he can get no wages." 

J. E. Cairnes (" Some Leading Principles ") p. 462, says : " Capitalists and laborers 
receive large remuneration in America because their industry produces largely." 

Edward Atkinson, in " What Makes the Rate of Wages," states the same principle 
thus : "I have attempted to demonstrate that in all productive employment the rate of 



NATURE 18 NIGGARDLY. 295 

It is not clear, however, yet in what definite relation profit- 
making stands to wages-earning^ — in the comparative comfort and 
ease of life it brings to the average of those engaged in the two 
modes of life. For profit-making includes also loss-incurring, and 
the means of estimating the totality of losses, incurred by the profit- 
makers, are veiy defective. The New Yoi-k Chamber of Insurance 
once put forth the estimate that the losses arising through the 
destruction of property by kerosene, used for lighting purposes, 
exceed the entire value of all the petroleum extracted from the 
wells to that date. There is a prevalent belief, among those most 
experienced in gold and silver mines, that the amount obtained 
from the profitable mines so little exceeds the losses on the unprofi- 
table ones, that the net result makes raising ore less profitable than 
raising corn. The number who fail in mercantile life is fre- 
quently stated at from 90 to 95 per cent. But those who succeed 
constantly make a percentage of loss which tends to reduce their 
profits to the average level of the salaries usually paid to men of 
their capacity. 

115. Is Population a Check on Wages? — Adam Smith 
taught the germ of the doctrine, which Malthus elaborated, that 
there is a sort of food fund in nature, apart from human labor, 
which may properly be spoken of as the ' ' natural means of sub- 
sistence ; " * that population is abundantly supplied in proportion 

wages which can be paid in money must depend on tlie sum of money which is re- 
ceived from the sale of the product. Inasmuch as those who work for wages in strictly 
productive occupations constitute by far the largest portion of wage-receivers, the rates 
of wages for personal services, which are only indirectly productive, are gauged by the 
same standard. All profits and wages must come out of the gross product. Further- 
more, all profits, wages, earnings, or other income, must be substantially derived from 
each year's product, because the year corresponds to the series of seas^ons in which one 
crop is made. A part of the product of each year is carried over to start the work of 
the next year upon ; but a part of the product of the present year was brought over 
from the previous year to start the work of this upon. Therefore the measure of what 
there is to be divided by tlie measure of money must, in the long run, depend upon 
what each year's product will bring in money. If, then, the annual product is large, 
because the resources are great, because capital is ample, because labor is effective, be- 
cause the army is but a border police— then the sum of money derived from tlie sale 
will also be large, for the reason that in spite of all natural obstructions between one 
nation and another, the product of one nation, as a whole, comes directly or indirectly 
into competition with the product of the world." 

* " Wealth of Nations," by McCuUocb, p. 36 : " Every species of animals natmally 
multiplies in proportion to the means of their subsistence, and no species can ever 
multiply beyond it. But in civilized society it is only among the inferior ranks of the 
people that the scantiness of subsistence can set limits to the further multiplication of 
the human species, and it can do so in no other way than by destroying a great part of 
the children which their fruitful marriages produce." 



296 EGONOMIG PHILOSOPHY. 

as it remains small relatively to this natural means of subsistence ; 
that, as it increases, it presses upon these natural means of sub- 
sistence ; that if, from any cause, this means becomes abundant, 
the multiplication of offspring- among mankind is a check reduc- 
ing the rates of wages, checking procreation, until the means of 
subsistence again catch up with the number of men. 

The fallacies in this doctrine are, (1) that it is only in the savage 
state that the food fund, which sustains man, is supplied by nature, 
and even then the average labor of appropriating, what nature is 
supposed to have gratuitously supplied,makes division of labor, and 
therefore increase in the number of laborers, a source of gi'eater 
abundance in the supply. In hunting deer ten persons and twenty 
dogs wfll get more than ten or twenty times the quantity of deer 
that one person can, because they can "corral" the deer, and 
drive him within their range, or where they want him. 

(2) The poor always multiply faster than the rich, and men are 
always more reckless in multiplying their species in the degree 
that they are poor. Families continuously rich soon become 
extinct. 

(3) As every species of animal, including man, constitutes a part 
of the means of subsistence of other animals, the faster they all 
multiply, the more means of subsistence there must be. Man, by 
cultivating crops, g-rains, and grasses for the food animals, 
increases immeasurably the means of subsistence of horses, asses, 
mules, horned cattle, including milch cows, sheep, goats, turkeys, 
geese, chickens, hogs, hares, and all domesticated animals, and of 
many wild ones. He thus makes the excess of the activity of 
the procreative power, in the lower grades of life over that of man, 
a guarantee of the far more rapid increase in human food than 
man himself can possibly effect in his own numbers. 

(4) The check on consumption of means of subsistence, which is 
found in checking procreation, checks, in an equal degree, the 
means of production. For all human means of subsistence are 
not only the product of labor, but the facility of their production 
increases with the increase in the number of laborers eraploj^ed 
in their production, far more rapidly than the number of laborers 
does. 

(5) The check on decline of wages, if any could be effected, by 
diminishing population, would take effect years after the necessity 
for it is felt, if it is ever felt, and when perhaps, scarcity may have 
given place to abundance. Even the one year required for the 
gestation of the child, is too long- a period for a laborer to predict 



LITTLE ECONOMIES. 297 

whether it will increase or dim-inish his store, and he certainly will 
not extend his glances over the eighteen years required to convert 
the prospective offspring into a competing worker. During the 
first live years after the birth of a child, the cost of his support 
does not exceed the increased value of the laborer s work through 
the greater stimulus, steadiness, and sense of responsibility 
which ordinarily comes with the parental relation. It is only 
when the child begins to be about eight or ten years of age that 
the cost of his maintenance is felt as a tax, but by that time, in 
most conditions of life, he can be worth his board as a helper. Upon 
a farm he can gather the eggs, feed the chickens, drop the corn, 
ride the horses to water, and often catch and harness them, pick 
the berries, and on the great farms of the West he can, perhaps, 
sit on the sulky of the cultivator, and do part of the mowing or 
harvesting. In cities he can be cash -boy, messenger, answer the 
bell, and perform many kinds of light, useful tasks. It is doiibt- 
ful if there is, or need be, an unproductive period, in the full eco- 
nomic sense, in any human life. To suppose, then, that a passion 
which nature has made one of the most difficult to resist, since 
on it depends the continuance of the human race on earth, would 
be checked in its action by the apprehension that twenty-one years 
later it would place the labor supply in excess of the demand, is 
so pi'ofoundly dull as to be seriously funny. 

116. Countries of Higli and Low Wages. — The reasons 
why some countries maintain a higher wage-rate than others are 
not unlike those by which some individuals, in the same country, 
maintain a higher wage-rate than others. China, relatively to 
Europe and America, is made a very slow country by the absence 
of beasts of burden as a means, of agriculture, labor, and rural 
transportation, and by the consequent absence of agricultural 
machineiy, and of interior roads, and an almost exclusive re- 
liance on human labor, whereby the population are packed in 
the towns, and along canals and rivers, while large portions of 
the country, which, with better transportation, would be studded 
with farms, are left in solitude. Hence the aggregate earnings 
are lower and enjoyments fewer than in Europe and America. 
Yet, of what the Chinese do produce, nothing is wasted from hu- 
man consumption by the demands of horses, cattle, and means of 
transportation. Their saving in railroad building alone amounts 
to six thousand millions of dollars for every fiftj^ millions of pop- 
ulation comijai'ed with the United States. Their labor is all directly 
bestowed on the production of food and drink and very little on 



298 ECONOMIC PHILOSOPHY. 

mere means, machinery, implements, and buildings. Hence a 
wage very mucli lower produces a degree of average comfort only 
a very little lower than is known in Europe and America, or the 
difference in comfort is far less than the difference in the money 
used in paying the wages. 

There are even many compensating economies, so far as human 
comfort is concerned, in a stationary civilization. As industry is 
matiifesting no enterprise, it is making no losses by enterprise, 
but only those very great losses which it makes through lack of 
enterprise. It is not expending its efforts on great railways not 
needed, great wars for mere " ideas," great contests for abstrac- 
tions or theories, nor is it expending its force like the Egyptians 
on great pyramids and monuments, like the Greeks on great 
architectural temples, statues, and carvings, like the Romans 
on great roads, or wars and conquests, like the Germans and 
French on great standing armies, or like the Americans on great 
railroads. Needing less force of character, a vegetable diet suffices, 
nor is this reiiiforced by alcoholic poisons. Hence, simultane- 
ously with this low wage-rate, there runs an economy of effort, 
which makes all the efforts actually made tell effectively on 
promoting the sustentation of life. This is accomplished perhaps 
more successfully and evenly, taking long periods of time 
and great numbers of population together, than among any other 
race, leaving to all classes of the Chinese neai'ly the same 
ratio of time for cultivation and amusement as is devoted to those 
purposes in other countries. * 

As the Chinese are slower in production than Europe and 
America, in like manner do the rural and peasant populations of 
most of the continental states of Europe, and of many parts of 
England, fall behind the farming classes in America. A lower 
rate of agricultural profit has called forth a lower range of enter- 
prise among farmers, less use of machinery, and a slower and 
finally a dearer and more slavish and laborious mode of produc- 
tion. 

Contrary to a very frequent assumption, cities are the sphere of 
more productive labor than the country, capital earning higher 



* Adam Smith (p. 33) says : " China has been long one of the richest, that is, one of 
the most fertile, best cultivated, most industrious, and most populous countries in the 
world. It seems, however, to have been long stationary,— but it does not go backward. 
Its towns are nowhere deserted by their inhabitants. The lands which have once been 
cultivated are nowhere neglected. The same, or very nearly the same, annual labor 
must continue to be performed, etc." 



EFFECTS OF MA CHINER Y. 299 

profits and labor higher wages. Points fifty miles apart dilfer by 
from 50 to 100 per cent, if the one is sparsely settled and 
the other densely. Adam Smith observed that wages a few miles 
out of London were much less than they were for the same ser- 
vice in London. The same holds in New York as compared with 
points only thirty miles distant. 

117. Labor-Saviiig- Machines. — The introduction of labor- 
saving machinery has some tendency to enhance wages, in the 
fact that the employer of the machinery makes at first as a profit 
the whole difference between the cost of performing the work by 
the old and by the new process, which rate of profit is only grad- 
ually reduced as other capitals compete in the performance of 
the same work by the new machinery. Until the higher rate of 
profit is thus reduced by competition, extraordinary rates of profit 
are being made on the capital invested in performing the work 
by the labor-saving process, and wherever extraordinary rates of 
profit are being made, there capital will forego a part of its profits 
in the form of increased wages, in order to increase its output 
rapidly and to ' ' make hay while the sun shines. " As the suc- 
cessful working on new forms of machinery nearly always in- 
volves some degree of skill, it is often better economy to enlarge 
the wages of those who have some degree of skill than to take on 
new and unskilled hands. Probably every labor-saving inven- 
tion has witnessed the increase of wages to labor, through the 
increased profits to capital obtained by saving labor-cost in the 
production of commodities, during the interval in which the 
former selling price of the commodity had not yet fallen to the 
new cost of production. 

One of the most intricate problems in political economy is to 
measure the gains to wages-woi-kers against the losses to the 
same class, through any of the causes connected with an expan- 
sion of dimensions in production, whether it be the increase in 
the division of labor incident to the large industries relatively to 
the small, the introduction of machinery, the extension of 
markets, the widening of competition and consequent equaliza- 
tion of prices over a large area, the employment of large capitals, 
the exclusion of effective competition, or any other. If it be 
sought to determine whether women were better paid or more 
esteemed before or after the distaff and spinning-wheel were 
superseded by the power loom, and the needle by the sewing 
nmohine, the problem becomes involved by the fact that loss and 
profit alteriiate to the same class, from the same cause, as rapidly 



300 ECONOMIC PHILOSOPHY. 

and inextricably as the threads in a woven fabric alternately suc- 
ceed each other as upper and under. The flowing- robes of the 
ancients economized time in sewing, but wasted cloth relatively 
to the degree of warmth afforded, since they involved little or no 
cutting, sewing, or fitting to the figure. Sewing in its first effect 
economizes weaving or makes more clothing out of fewer skins 
or less cloth or other materials. But by roeans of the economy 
of materials effected by sewing, so many more garments come to 
be worn and kept for wear that there is more use for the weaver 
than if the economy of the needle had not been practised. The 
sewing machine seems to dispense with the needle. But no 
sooner has it done so than styles of ladies' apparel so change as to 
absorb far more sewing "per front foot "than had previously 
been in vogue, many gowns being made up expressly to expend 
upon them all the sewing possible, and being so draped as to ren- 
der the services of the machine subordinate to the taste of the 
draper. Thus the demand for the needle has rather increased 
than diminished through the introduction of sewing machines. 
So in the absence of statistics it might with reasonable safety 
be affirmed that in America, where steam is so largely sub- 
stituted for human labor in transportation, as large a ratio of the 
population are still employed in transportation as in China, where 
it is accomplished wholly by human labor. The increase in the 
division of labor has the effect to educate workmen only in one 
part of a process, and thereby to render them dependent on the 
co-operation of a large number of others, so that loss of work to 
one in many cases means loss of work to all. Per contra, this 
same increase in the division of labor furnishes some form of 
work adapted to the powers of the most crippled or incompetent, 
and so lessens the need of idleness, and therefore of the depen- 
dence of the idle on the industrious. 

lis. Lalbor Conibinatious. — The degree in which the state 
can regulate rates of wages depends on the degree in which it 
desires to be the responsible entrepreneur in all productive indus- 
tries. A state which says to an employer, ' ' You must pay a given 
sum for a certain labor-time " should be prepared to run the indus- 
try itself at the same rate of wages if the employer fails to do so. 
Now that the government of England has, by its several land acts 
concerning Ireland, adopted the principle of " tenant right," /. e., 
that the tenant has as much a right to occupy land, upon paying 
a fair rent, as the landlord has to receive the rent, it is impossible 
to predict that governments may not in the near future, if the 



CORNERS ON LABOR. 301 

pressure toward socialism continues, acknowledge a droit du tra- 
vail, or right to be employed at a fair rate of wages, by any one 
who has the requisite means of employment. At present, how- 
ever, such legislation would seem to be visionary and subversive 
of liberty. • If labor relations can be adjusted in this manner, why 
should not the sale of all commodities as well ? On this basis 
thei'e would soon be no such fact as individual interest left, and 
the state would become the sole organizer of industry. It is not 
the province of economic science to revolutionize society by 
demonstrating the theoretical inadequacy of all existing condi- 
tions, but rather to elucidate the laws which are operative in mak- 
ing existing conditions what they are. Hitherto the province of 
the state has been to supplement individual enterprise, and 
to facilitate co-operation in industry, but not to compel it — to aid 
by relief the sufferer who so fails in industry as to run short of 
the means of subsistence, but not to acknowledge that if he can 
find no other purchaser for his labor the state will buy it at a 
stipulated price. 

Laws forbidding laborers to combine to put up the price of 
labor, and laws forbidding employers to combine to put it down, 
have a historical value as the expression of the prevailing public 
conscience at the time, like laws fixing the rates of interest, or the 
weight and price of a loaf of bread. The purpose of all tirade 
unions is to mass large numbers of laborers into a conti'ollable 
organization, with the view of withholding it from market until 
its demand as to compensation, hours, terms, or other details is 
complied with. It gets a " corner" on labor, to force it up, in the 
same manner as buying, holding, and refusing to sell large masses 
of wheat, cotton, or stocks gets a corner on those commodities, 
and tends to force thena up. The statutes heretofore passed 
against corners in grain, in this country, do not differ in principle 
from those foi'merly passed in England to discourage corners in 
labor, or combinations to withhold labor, in order to raise its price. 

The fu«idamental fallacy underlying such laws is that, while 
they assume that a laborer is entitled to all his labor is worth, 
they assume that he can only combine to get more than his labor 
is worth, whereas there is, in practice, no test whereby to draw the 
line between combining to get the true value of laboi-, and com- 
bining to obstruct industry by setting upon labor an impossible 
price. For laborers to combine to get the true value of labor 
can hardly be called objectionable. And yet employei-s have the 
same right to combuie to avoid paying more. The limit can only 



302 ECONOMIC PHILOSOPHY. 

attach, to the acts to be performed under the combination. 
McCulloch* says "a criminal act cannot be generated by the mere 
multiplication of acts that are perfectly innocent," meaning 
thereby that a thousand men have the same right to combine and 
ask at once for higher wages, and stop work if the request is not 
granted, as one man has to withhold his labor. Mr. Jevons t com- 
bats this doctrine strenuously, holding that for 1,000 workmen to 
withdraw their work at once, in order to cripple an employer on 
his contracts (or a car company on its franchise of carrying pas- 
sengers), is like the act of 1,000 bank-depositors, combining to 
withdraw their deposits at once, in order to break the bank, or like 
a combination of 10,000 persons, to walk at one time in a certain 
street, in order to block it. The English Conspiracy and Protec- 
tion of Property Act is drawn on this line, and makes it criminal 
to break a contract of service or of hiring, knowing or having 
reason to belive that the probable consequence of so doing, either 
alone or in combination with others, would be to endanger life, 
limb, or property. 

» " On Wages," 2d Ed., p. 90. 

t " The State in Relation to Labor," pp. 129-131. " There is no bank in the country 
which could stand a run on the part of a considerable number of its depositors. It 
must be quite apparent that any agreement between bank depositors to draw out money, 
in order to overthrow a bank, is a totally different thing from drawing out in the ordi- 
nary course of business, and is in fact a serious matter." 

"There is hardly one of the ordinary arrangements of trade which may not be entirely 
upset by concerted action. The bakers and butchers might starve us out ; the cab 
proprietors might refuse to carry us away ; innkeepers might decline to harbor us; our 
neighbors might tacitly avoid assisting us. No man's life would be safe if unlimited 
boycotting were regarded as legal . " 

"Industrial Treason ... I venture to think that a great strike, if carried suffi- 
ciently f ar,might assume the character of social treason. As in the case of the great rail- 
way strike in the United States in 1877, it might bring society to a dead lock. If 10,000 
Torkshiremen were to march upon London, with the very best arms they could muster, 
the government would probably surround and capture them in twenty-four hours by 
the aid of railways and telegraphs. But if ten thousand railway men were to form a con- 
spiracy to obstruct and destroy the railways and telegraphs of the kingdom, they 
would create infinitely greater alarm and injury, and would be checked with far greater 
difficulty." 

Mr. Jevons' point involves the fact, which so frequently escapes considei^tion in con- 
nection with labor troubles, that civil legal process acts only on capital. Executions 
for damages are collectible only against property. Hence the quiver of civil law reme- 
dies contains no arrow which will reach labor, i.e., compel the performance of a con- 
tract to work by a laborer, or punish its non-performance. We do not urge or argue that 
there should be such laws enforceable against labor, but there should be a frank recog- 
nition of the fact that there are no such laws. 

If the law is to recognize a right in the wages-worker to continue at work at a rate 
which arbitrators may regard as reasonable, a proposition which it would be very pre- 
mature to affirm, it might follow as a corollary that some mode should be devisfd 
whereby the law would nt least attempt to hold tlic wages-worker to perform his con- 
tract. 



LABOR MAT COMBINE. 303 

Shall the laborers, who combine, be permitted to overawe and 
intimidate other employees who seek to take their places ? 

What species of arguments and inducements shall be deemed 
to be a fair exei'cise of persuasive speech, and what shall be styled 
threats and intimidation ? These have been made questions for 
determination by a jury, the law contenting itself by saying the 
workmen may conabine to stoj) working, and peaceably to dissuade 
others from working, but not to coerce, threaten, or intimidate 
those who propose to fill the places they have vacated. It is prob- 
able, however, that as long as " strikes " and " lockouts " occur, 
something like threats and intimidation will be their usual 
incident. 

There is a disposition among economists generally, to concede 
that labor unions, to protect wages, have, on the whole, had much 
the same effect to enhance the rate of wages, as wars between na- 
tions have had to promote national rights, and to compel the con- 
cession of national demands. Their costs are great. Their sacri- 
fices often seem far more cruel than the wrongs they are incurred 
to resist. It is, however, as idle to argue against them as to argue 
against war of any other kind, or even against litigation in the 
courts. Wherever there are conflicts of interest, sentiment, and 
belief, there must be war in some form, the most important ques- 
tion being in what manner it shall be conducted. Whether wise 
or otherwise, they will recur, and their recurrence leaves in its 
path generally much temporary loss and some small measure of 
permanent gain. 

119. Arbitration and Labor Courts. — To some minds it 
seems apparent that it is as illogical and impracticable to attempt 
to vest courts or officers with the power to decide future rates of 
wages, as between employer and employees, as to decide the prices 
at which commodities should sell in every particular case. Mr. 
Jevons denies that such laws can be efficacious,* but admits that 
in the reign of Elizabeth, of George II., and finally in that of 
George III., statutes were passed conferi'ing this power, though 
finally, in the last-named reign, the principle was reasserted that 
the magistrates and arbitrators should not bind any parties to 
future contracts, except by consent of both parties. 

Others think there is a certain heartlessness in treating labor 
wholly as a commodity, and that the fact must be recognized that 
the laborer is made, by various circumstances, immovable as to his 

* "The Stii e in Relation to Labor," p. 150. 



304 ECONOMIC PHILOSOPHY. 

place of residence, and unchangeable as to his location, and must 
either be supported by taxation as a pauper, where he is, if he loses 
his work, or must be kept in work, or must be allowed to starve. 
That society does not claim the right to allow him to starve is suf- 
ficiently shown by the prevalence of the poor laws. The degree of 
coercion upon the tax-paying employer, involved in requiring him 
to pay a given rate of wages, does not seem to be necessarily more 
odious than in requiring him, and men of his class, to support the 
worker outright by reason of his loss of employment. We believe 
the arbitration laws, hitherto passed in the United States, do not 
involve the right, on the part of the courts, of determining future 
rates of wages, nor do we perceive by what process or machinery 
such provisions, if enacted, could be enforced. Virtually, there- 
fore, the function of courts of arbitration between employers and 
employees must, for the present, be conciliation. 

120. Labor Agitations for a Social Revolution. — The 
proposal to reorganize society upon a basis that shall be unselfish, 
public-spirited, and kind to all, and that shall make men happy in 
proportion to their unselfishness, instead of, as now, giving them 
wealth in proportion to their possession of the enterprising and 
accumulative faculties, was first prominently made by PJato in 
his republic, and has been reiterated, by visionaries and enthusi- 
asts, in nearly one identical form, for twenty-three centuries. It 
rests on certain false assumptions in political economy, chiefly 
that all human possessions, powers, rights, and opportunities 
ought to be, and can be, equalized, a condition which would be 
fatal to the very existence of all these possessions, rights, powers, 
and opj)ortunities. The so-called economic arguments of these 
agitators generally consist in representing all forms of invested 
capital as resulting from the robbery of labor, and as being in fact 
" stolen wages." They make no account of the fact that all 
invested capital is employed in social uses ; that the greater its 
quantity the lower the rate of compensation at which society gets 
its use ; that society gets the use of that portion of capital which 
is privately owned, at least as cheaply as it gets the use of that 
which is publicly owned ; and that, were there no gi-eat reservoirs 
of j)rivate ownership, into which the successful could profitably 
invest their earnings and savings, society could not be tided over 
its periods of lower production, without great famines, and indeed 
civilization could not exist; women aiid children could not be 
maintained after the death of their immediate husbands or fathers ; 
the very implements of the great industries, such as railways, 



AT LAST LABOR GETS ALL. 305 

banks, steamship lines, and factories, could not exist, and society 
would be remitted back to the condition in which it now is in 
Central Africa. 

The principle of absolute free speech implies the unlimited polit- 
ical right to teach economic and social falsehoods, the aim of 
which is to stir up the destitute class of society to believe that they 
can by some undefined uprising, coiq) d'etat, or revolution, come 
into tlie possession of plenty of every thing they desire. Under- 
neath these complaints there lies a misconception of the social use 
that is actually made of all stored-up wealth, and a misintei'pre- 
tation of the utility of wealth-accumulation, as a means of promot- 
ing equality of wealth-consumption.* 

The instinct to hoard enjoyable products is manifested by 
squirrels, ants, bees, and hibernating quadrupeds. In primitive 
stages of society misers might hoard gold coin. But in the mod- 
ern organization of industry there is no hoard. The supposed 
hoard is not aboard, but merely a power over, or claim upon, some 
form, of reproductive wealth, like shij)s, cars, or locomotives, of 
which labor has the loan and custody as implements, the public 
has the product, viz. , ti'ansportation, society has the net result, 
viz., cheapness and equality of consumption, and the so-called 
hoarder has a power to draw dividends on stock, the whole of 
which — except the small fraction required for his clothing, shel- 
ter, food, and fuel — he must sooner or later, and directly or indi- 
rectly, and at home or abroad, pay out for labor. It is singular 
that the socialists, who begin by affirming that labor is the sole 
cause of all value, fail to infer that the only use to which wealth 
can be ultimately put must be to pay for labor, and hence that, in 
the long run, labor must get it all. 

Thus Mr. Griinlund first arrives at the rate of working on 



* Robert Ingersoll, in a lay sermon, at Chickering Hall, delivered to an audience 
chiefly socialist, said : " It is an insanity to get more than you want. Imagine a man 
in this city, an intelligent man, say with, two or three millions of coats, eight or ten 
millions of hats, vast warehouses full of shoes, billions of neckties, and imagine that 
man getting up at four o'clock in the morning, in the rain and snow and sleet, working 
like a dog all day to get another necktie ! Is not that exactly what the man of twenty 
or thirty millions, or of five millions, does to duy ? Wearing his life out that somebody 
may say, ' How rich he is ! ' What can he do with the surplus ? Nothing." 

The investments of Vanderbilt in railways, of which society has the entire use in 
transportation, of which labor has the entire loan and keeping, for productive purposes, 
and of which Vanderbilt has the control and government, only on the single condition 
of paying more for its stock, and running it more economically than any competitor, 
hear only a humorous, not an economic, resemblance _to an investment in billions of 



306 EOONOMIG PBIL0S0PH7. 

shares, which, as we have shown in a previous chapter, is carried 
on between capital and labor, by adding- the value of the raw ma- 
terials, and allowing- 5 per cent, of the total value for annual 
depreciation of machinery, implements, and buildings — deduct- 
ing- the total of these two from the value of the finished products 
of manufactures. The remainder g-ives the total jomt eai^nings, 
or fund for division, between the labor performed in the factory 
during the year and the labor stored in the form of capital in the 
factory, good-will, stock, land, machinery, losses, bad debts, ex- 
tensions of plant, profits, and all other modes in which capital 
has been invested, or sunk, in creating the business in which labor 
is employed. Mr. Griinluud assumes that labor, instead of being 
permitted to work the factories on equal shares with capital, ought 
to take the whole, and that all that capital gets is " fieecings." * 

This is equivalent to holding that there ought to be no means 
of investing the savings of labor in any reproductive form what- 
ever, but that civilized society ought to return to the African state, 
in which no reproductive capital exists. 

But, because labor agitators can formulate no remedies which 
it would be within the province of a legislature to enact, it does 
not follow that they may not bring about a state of feeling in the 

neckties. The basis of the socialist complaint is that the wealth, accumulated in large 
fortunes, is wealth capable of being privately csed. It is not. It is social wealth pub- 
licly used and privately controlled. 

* " The Co-operative Commonwealth," by Laurence Griinlund. 

Mr. Grtinlund continues, through 278 pages, to anathematize society, but the follow- 
ing is absolutely the only line of exposition he gives of the mode in which things are to 
be mended. On p. 102 he defines his whole remedy as follows : 

" For what is ' the Co-operative Commonwealth ? ' 

" Extend in your mind division of labor and all the other factors that increase the 
productivity of labor ; apply them to all human pursuits as far as can be ; imagine 
manufactures, transportation and commerce conducted on the grandest possible scale, 
and in the most effective manner ; then add to division of labor its complement,— Coij- 
CEET ; introduce adjustment everywhere where now there is anarchy ; add that central 
regulative system which Spencer says distinguishes all highly organized structures, and 
which supplies ' each organ with blood in proportion to the work it does ' and — behold 
the Co-opBEATivE Commonwealth ! 

" The Co-operative Commonwealth, then, is that future social order — the natural heir 
of the present one— in which all important instruments of production have been taken 
under collective control ; in which the citizens are consciously public functionaries, 
and in which their labors are rewarded according to results. 

" A definition is an argument." 

Imagine a legislature, or constitutional convention, assembled and asked to enact the 
above vision into law. The act, would read : " Be it enacted that division of labor and 
all the other factors that increase the productivity of labor shall be applied to all human 
pursuits as far as can be ; that manufactures, transportation, and commerce be con- 
ducted on the grandest possible scale," etc. The act would be useful only as a joke. 



WHAT HOLDS A MAW DOWN. 301 

minds of many men wliicli may call for legislative as well as 
judicial action. There is a point at which the teaching of a false 
system of political economy merges into incitement to assassina- 
tion, thugism, and ti-eason, jvist as thei'e is a point at which the 
doctrine of Malthus, concerning population, merges into becom- 
ing accessory before the fact to a criminal abortion, and just as 
there was a point in the doctrine of the duty of suppressing relig- 
ious heresy by coercion, where even the supposed preaching of the 
Christian gospel merged into an attempt on the life of innocent 
persons. 

The infei'ence, in logic, is short, and reasonably correct, that if 
all returns upon capital were a robbery of labor, then it would be 
the. duty of the laborer to avenge his poverty on the capitalist. 
The premises being false, can society long continue to hold that 
every man has, under the sacred guise of free speech, the right to 
recommend and urge crimes, which nobody can be permitted to 
commit ? 

121. Causes which Compel Men to Work for Wages. — 
Law and government have almost nothing to do with determin- 
ing whether a man shall continue destitute — working for wages 
all his life, or shall accumulate a fortune and emploj^ thousands 
of laborers. Birth and education influence it almost as little. 
Neither race, sex, color, nor even health, are more than second- 
ary aids. Honesty is not indispensable to money-making, and 
though knavery, thatkeeps within the law, is often consistent with 
great business success, yet those who are highly successful as 
money-makers compare, on the whole, very favorably with the 
unsuccessful, even in integrity. 

The qualities which take a man out of the wages class, or, on 
the other hand, condemn him to wages labor for life, are clearly 
definable, and work with a precision nearly invariable. Haste 
in forming judgments, egotism in contesting the aims or thwai't- 
ing the plans of one's superiors or associates, inability to defer to 
the will or judgments of those on whom one is dependent for suc- 
cess, making uj) the qualities known as "big head," will keep very 
bright men in the wages class. Animalism, or the inability to 
resist the temptation to sensual indulgence of the appetite as soon 
as the means are obtained, prevent that exercise of parsimony at 
the outset which is usually necessary to emancipate one from 
wages work. Timidity in investing one's money in doubtful en- 
terprises, for fear of losing it, may often concur with love of the 
ease of life which belongs to a person earning comfortable wages. 



308 ECONOMIC PHILOSOPHY. 

to retard enterpi'ise, and as a rule, unless a person becomes a 
handler of capital, and an employer of labor on his own respon- 
sibility, before he reaches thirty years of age, he will work 
for wages all his life. Multiplicity of aims, when one is trying 
to do business, as, if one desires also to be a patron of art, music, 
politics, religion, literature, philanthropy, or social reform, cause 
"too many irons in the fire," a fatal objection which remands 
many, who have once acquired capital, back to the wages life, or, 
at least, to salaried positions. A defective sense of value, or an 
inaptitude for discerning in what directions values will rise, will 
keep a man in the wages life. A captious, quarrelsome, or litig- 
ious temper, peremptory in asserting its own way, and quick to 
terminate business relations without compromise, strewing a 
man's life with unadjusted enmities and severed friendships, will 
often limit greatly one's ability to become an emploper of labor. 
Yet, it must be admitted that, not seldom, there are men who, by 
one or more acts of sharp-grasping, and even criminal injustice, 
have attained the beginnings of large fortunes, thus beginning, in 
villainy, lives which have been distinguished by great economic 
success. 

The qualities which keep a man in the wages class, when an- 
alyzed, are generally, though not always, those which would 
make it least to the interest of society that he should organize and 
control labor. Usually it is being unfaithful over a few things, 
that prevents his being made ruler over many things. Animal- 
ism, egotism, precipitancy, insubordination, sensualism, timidity 
and indecision, love of ease, fear of risk, versatility of aims in 
life, lateness in learning how to make money, defective sense of 
values, inaptitude to adapt production to demand, uncompx'omis- 
ing quarrelsomeness and imperiousness, are all reasons which 
will cause one's use of money to be unproductive, and one's influ- 
ence over industry to be disjointing and disastrous. But the fact 
that one gets his money by a trick or fraud, as Jacob in cheat- 
ing Esau, does not indicate that the use he will make of the 
money will be of a kind to lessen, derange, or demoralize indus- 
try. 

The kind of men society is interested in having placed in con- 
trol of industry are those only who will, when an enterprise is 
small, devote the minimum of its returns to personal indulgence, 
and the maximum to productive effort. This kind of man may be 
opprobriously styled a mean, sharp, or overreaching man, but he 
has the qualities which will impart to industry, in its earlier strug- 



ASSORTING MEN. 309 

gles, success and permanency. On these qualities laboi' depends 
for its employment, and consumers for cheapness. 

When, by these means, as much effective industry is brought 
under the control of one will, as one intelligence can wisely 
guide, then the possessor of this will and intelligence has risen 
to his greatest possible utility and dignity, usefulness, and profit, 
as an accumulator of capital and organizer of labor. 

Meanwhile the lack of the qualities which will cause a man 
successfully to accumulate capital, always implies the lack of those 
whereby he could employ labor with profit to itself, since all 
wages work is, as Mr. Griinlund's own diagrams show, a system 
of product-sharing, and hence the ' ' boss " who cannot make profits 
for himself cannot, continuously, make wages for his men. But 
if a man lacks the qualities essential to make the jDossession of 
capital profitable to him, it is no social wrong, but a very great 
blessing to him, that a class of men exist possessing these quali- 
ties, and able to give useful direction to his industry, which he 
could not usefully direct himself. 

Whoever has seen any thing of the two classes of men knows 
that precipitancy, misinformation, generosity, insubordination, 
lack of calculation, and yet lack of courage, characterize the de- 
liberations of nearly all workingmen's assemblies, while those of 
capitalists, however grasping, compi-omising, or corrupt they may 
be, are superior in a spirit of calculation and forethought. 

The wages relation does exalt the profit-maker to the position of 
master, and sink the wages-earner into that of servant, but it arises 
out of psychological causes as clearly a part of the necessary con- 
stitution of man as the causes which distinguish force and matter 
are in physics. Out of this relation grows an organization of in- 
dustry which is anarchic, in the sense that its essential principles 
are not due to, or affected by, human law ; but which is of far 
more value to mankind than any and all government or law can 
possibly be. 

122. The Organization of Labor in Industry. — Any 
organization of labor which fails to include within itself the 
capital necessary to the employment of labor, evidently implies 
the existence of another organization of labor, exterior to, and 
more or less independent of it, viz. : the organization of labor by 
capital, which employs the labor, gives it all the means of sub- 
sistance it actually receives, and even the means with which it 
sustains all collateral and secondary attempts at organization, 
including the means with which labor organizes itself, to fight 



310 ECONOMIC PHILOSOPHY. 

capital, when war between the two is necessary. Hence it is the 
primary organization of social industry, through the co-operation 
of labor with capital, under the inducement of wages to the 
worker and profits to the employer, that now constitutes the ex- 
isting organization of labor as an agent in actual industry. All 
other organizations of labor, such as the Knights of Labor, the 
Central Labor Union, and the trades unions, are organizations 
effective to aid in settling, with capitalists, the terms upon which 
laborers shall enter into the final compact with capital. Thereby 
they finally become, in the only true sense of the word, organ- 
ized labor, i. e., labor organically set in motion to effect indus- 
trial results, viz., to increase the consumption, production, and 
distribution of commodities. What are ordinarily called organi- 
zations of labor, i. e. , societies to adjust the terms on which men 
will work, bear the same relation to the actual organization of 
labor, or to society at work, as primaries in politics bear to the 
real government. When the actual officers of government 
have been selected, the primaries dissolve and lie dormant until 
another occasion for selection arises, while the government 
moves on in the hands of the ofiicers, whose choice the primai'ies 
have aided to determine. 

When the Knights of Labor, trades unions. Brotherhood of 
Locomotive Engineers, and other similar orders have done their 
work, labor is not yet organized. It has only fixed the terms on 
which it will organize. Its real organization is only arrived at 
when the wheels of industry are again set in motion, with every 
man at his post, the loom deftly weaving its product, the Besse- 
mer cauldron blazing with its silvery draft of liquid flame, the 
engine toiling smoothly under its tremendous burden, and the 
car gliding "o'er the stony street." Labor is really organized 
only when society is again at work.* 

An example of a true organization of labor may be found in the 

* In a paper read before the Cleveland convention in May, 1886, by Lavyrence Har- 
mon of Peoria, it was stated that the fact of 200,000 men striking between April 24th 
and May 13th, and 125,000 men being out in the week ending May 12th, had entailed a 
loss of wages amounting to $3,COO,C00. and of gross returns to capital rising to $3,500,- 
000, of $4,000,000 in losses upon deferred and cancelled contracts, and of $20,400,000 
upon building contracts ; the entire loss upon strikes in the three mouths immediately 
following the first of May aggregating many hundred millions of dollars. To this must 
be added the efEort of the anarchists in Chicago to convert the strikes into a social 
revolution, the slaughter of the police by dynamite, and the impending sentence upon 
leading anarchists consequent upon the tragedy. No one mistakes these events for an 
organization of labor. They are the disorganization of labor in its most short-sighted, 
cruel, and criminal form. Sue note to j). tJCo, 



UNCONSCIOUS PARTNERSHIP. 311 

following- illustration : Every one recognizes that working a 
farm on equal shares, where one person finds the land, improve- 
ments, buildings, seeds, fruit trees, implements, and, perhaps, 
cattle and flocks and poultry, w^hile the other, brings only the 
labor-power of himself, his family, and those whom he may hii*e, 
is a fair bargain, or, to put it more emphatically, a just partner- 
ship. For the farm, as it stands, represents many years of labor 
already done. The working tenant, who proposes to work the 
farm, offers one year of labor to be done, against many years of 
labor already done. This is the metayer system of Europe. In- 
deed, most parts of the world in all ages have been tilled under 
it, and its equity still remains to be questioned. 

Now fifty-four railways, which cost to construct and equip 
them $1,251,795,029.74, make annual returns to the Railway Com- 
missioners of Illinois. Their par capital is more than twice that 
sum, but with that we have not at present to do. These railways 
employ 156,007 workers, of all sorts, from president to brakeman. 
Their gross earnings are about one hundred and sixty -three and 
one-half millions of dollars, and yet all these railways are 
worked upon shares by the naked labor, i. e., labor not backed by 
the least capital employed in the business. The sharing comes 
out so evenly, though no effort at even sharing or profit sharing 
is thought of in adjusting any workman's salary, that there are 
paid in salaries and wages $81,936,170.81, and there are paid to 
the capital (labor previously done in constructing and equipping 
the roads) $81,720,265.53 yearly. 

123. The Terms of Partnership. Labor and Capital. 
— Working on shares is not an accident, in that natural organiza- 
tion of labor which arises through each man fitting into the 
niche that he finds made for himself, and doing simply the best 
he knows how to do, minding always his own business, and leav- 
ing other people to mind theirs. For instance, the total manu- 
factures of the United States have first to pay for their raw 
materials purchased, all of which have been the finished product 
of one or more previous industries, and have been created by a 
joint partnersliip of labor with capital, resulting in a joint shar- 
ing of wages of labor with returns to capital. Having paid for 
these, there remains out of the whole price received on sale of the 
products, a gross fund, out of which the capital (or labor done 
before the year began) had to divide with the labor done during 
the year. The division in 1880, for the total manufactures of 
the United States, was : 



312 ECONOMIC PHILOSOPHY. 

To wages (exclusive of those earned on raw ma- 
terials) % 947,953,795 

To capital for all purposes 1,024,801,837 

The share taken by capital includes payment for erect- 
ing plant, procuring orders, marketing product, extend- 
ing works, making repairs, insurance, machinery, interest, 
losses by bad debts, and losing contracts, etc. The principle here 
carried out is evidently that of working on shares. In the salt 
manufacture the division was : 

To wages (not earned on raw materials) . . . $1,260,023 
To capital (for all purposes) . . . . * '. 1,495,594 

In the mixed textile fabrics, the division was : 
To wages (not earned on I'aw materials) . . . $13,216,753 
To capital (for all purposes) ...... 15,677,109 

In the iron and steel manufacture, the division was : 
To wages (of same process for which returns of capital 

are counted) $55,476,785 

To capital (for all purposes) 49,809,750 

Where the nature of the business, or the inventions made in it, 
are such that caijital invested in machinery performs almost the 
whole of the labor involved in it, or where the nature of the busi- 
ness is essentially a commercial rather than a manufacturing one, 
the slight work performed in the manufacture being a mere inci- 
dent in a process essentially of buying and selling, as in meat 
packing, lumber, leather, etc., the transaction is less a partner- 
ship and the share of labor diminishes. Where, on the other 
hand, men and skill are nearly every thing, and machinery next 
to nothing, as in the ship-building, at a time when it consists, 
as now, in the United States, almost wholly of repairing, 
and the silk manufacture at a time when new processes have 
to be introduced through new workmen, and a generation has 
to be educated up to the art, the share of capital sinks, and the 
share of wages expands to three-fold the partnership share. 
Compare : 



Slaughtering and S Wages to labor 

meat packing. . . \ Gross returns to capital . 
Woolen goods \ Wages to labor 

manufacture. . . \ Gross returns to capital 
Lumber. . . Wages to labor . 

( Gross returns to capital 
Leather i Wages to labor 

* \ Gi'oss returns to capital . 



$10,508,530 
25,314,981 
25,836,392 
33,924,718 
31,845,974 
55,226,360 
4,840,413 
7,199,375 



CO-OPERATIVE SHABING. 313 

And again compare the arts in which machinery is of little im- 
portance, ship repairing, or in which skill is being developed by 
an educating process (silk manufacture) : 

Ship-building, re- S Wages to labor . . . $12,713,813 

pairing. . ) Gross returns to capital . . 3,350,156 

Silk and silk goods i Wages to labor . . . 9,146,705 

manufacture. . . \ Returns to capital . . . 3,805,217 

It is idle to deny that these figures prove that under the exist- 
ing wages system all industry is product-sharing, in fact. Though 
the proportion in which the two factors share with each other 
varies, according to the relative importance of the service which 
capital renders to labor, when weighed against that which labor 
renders to capital, equivalent values exchange between the two. 
Where labor can say to capital, we can perform this work three 
times better without you than you can without us, as in ship re- 
pairing, it takes a three-fold share, and vice versa. 

It would be interesting to compare the unintentional profit- 
sharing, thus pointed out in the aggregate industries of the United 
States, with the intentional profit-sharing practiced by M. Godin 
in France, by the Pillsbury Flour Mills at Minneapolis, by the 
Peacedale Woolen Manufactory, and by Brewster & Co. , with a 
view of determining whether the share of the value of the aggre- 
gate product which goes to wages is larger in proportion to the 
share which goes to capital, in the intentional system of profit- 
sharing, than it is in the unintentional system. It would 
probably be found that the wage-workers get the highest ratio of 
the aggregate product, in those industries which depend the 
most for their profits upon the efforts of the wage-workers. 
The editor of Le Devoir makes the very remarkable calcula- 
tion concerning M. Godin's enterprise at Guize, "that if all 
the working population of France were employed in 12,333 simi- 
lar co-operative workshops, and if similar cash sums had been 
dispensed in each one, since the Familistre Society has been regis- 
tered, it would have given an increased purchasing power of no 
less than £292,880,000 during that short period." But how would 
an addition of more than one hundred thousand millions of dol- 
lars, to the wages bill of the manufacturers of France, aflfect them 
in their competitions with those of England, Germany, and the 
United States ? Does the stimulus of profit-sharing enhance the 
quality or rapidity of the work, in a degree as great as it increases 
the cost ? If not, would not the deduction from the profits lessen 
the degree in which wox'ks could be extended, new machinery 



314 ECONOMIC PHILOSOPHY. 

supplied, and the number of manufactures that could continue 
their woi'ks, and would not curtailment in these directions react 
against the wages of labor ? 

The Pillsbury Flour Mills, at Minneapolis, pays dividends only 
to those workmen who have continuously remained in service for 
five years, and to men in certain positions of responsibility, with- 
out regard to grades of service. It has paid three dividends of 
$25,000, $26,000, and $35,000, and the number of dividends is con- 
stantly increasing. To estimate the exact value of the profit-shar- 
ing policy, to the employers and the employed, it would be neces- 
sary to know the gross annual earnings, which constitute the fund 
for real division between capital and labor. This is arrived at by 
deducting from the aggregate value of the annual product the cost 
of the raw materials used, only. The difference will be the total 
fund for division between labor and capital. Adding together 
the wages and dividends paid to labor, and comparing the ratio of 
this total to the total received by capital, with the total received 
by labor and capital respectively in other establishments, would 
show whether the owners of the mills do or do not make a profit 
by profit-sharing, and whether this system will aid or handicap 
them in their contests with competitors. Few working-men will 
claim that co-operation or profit-sharing should be resorted to 
from philanthropic or charitable motives. If resorted to at all, 
it must be shown to profit the profit-sharer, as well as the profit-re- 
ceiver. The motive for it must be a business motive. The report 
of the Massachusetts Labor Bureau holds that profit-sharing must 
not interfere with the right to discharge workmen for negligence 
and inefficiency. And the experience of Brewster & Co. shows 
that profit-sharing does not wholly prevent strikes. Their work- 
men struck for eight hours a day, when they had it in their own 
power to reduce their day to eight hours, and when by striking 
they lost a dividend of $11,000 which would have been due a 
month later, besides losing $8,000 in wages. At the end of two 
weeks they went back to work on the old plan, of simple wages 
without the profit-sharing. 

In what degree the wages system may change into one of profit- 
sharing, may not yet be judged with certainty. The tendency as 
society increases in complexity, and as industry grows in intensity, 
' is to get away from monthly and annual salaries to piece and job 
work, and away from partnerships to joint stock concerns, or cor- 
porations, and salaries. Whether thei'e may, in certain kinds 
of business, be a reaction toward profit-sharing and co-opera- 



HOME AND FOREIGN LABOR. 315 

tion, it is too. early to determine, but we see no reason to pre- 
dict it. 

124. Effect of Importation of Competing Products on 
the TVag'es of Labor. — In proportion as transportation is cheap- 
ened, the competition between both capitalists and laborers, in the 
production of such commodities as admit of ready transportation, 
extends the war of competition to the i^opulations of all countries 
having like natural facilities of production. If cost of transpor- 
tation between England, France, Germany, Russia, or India, and 
the United States were reduced, in jjoint of both direct money 
cost and delay, to (zero) or nothing, so that a commodity, at the in- 
stant of production anywhere, could be sold in the United States 
at as low a figure as at its point of foreign production, and if the 
foi'eign country made equal use of machine power in production 
with ourselves, so that our labor could compete with theirs on 
equal terms, it is obvious that wages of labor expressed in money 
in all these countries would be equalized, those having the 
lowest rates being raised, and those having the highest de- 
pressed, until one common level would be obtained. In what- 
ever degree our wages are higher than those of the other 
countries named, we owe the fact either to the inequality of our 
competition owing to our greater use of machinery, or the ob- 
structions to traffic afforded by distance. For, abolishing these 
two inequalities, the foreign and domestic labor market would be- 
come one mai'ket, and it is a fundamental pinnciple in economics, 
that one commodity can only have one price in one market, where 
competition is free, and all purchasers are in equal possession of 
all the facts. 

Our profits of enterprise would of course suffer a like deduction ; 
but with that we are not now concei'ned. Higher profits of capi- 
tal, and liigher wages of labor, are the industrial foi'ces at work to 
induce the migration of populations from old to new centres of 
industry. When these stop, national growth by immigration will 
stop. Wages of labor, in the countries named, bear to each other 
about the following proportions : 

United States, England, France, Germany, Russia, India, 
150. 110 to 90. 70. 60. 30. 10. 

Multiplying these rates of wages into the wages-working popu- 
lations of the respective countries, and striking an equation 
throughout the entire mass, would show that if inequalities arising 
from machinery, and protection arising from cost of transpoi'ta- 



316 EGONOMIG PHILOSOPHY. 

tion were both removed, we might look for a wage rate of perhaps 
20 or 30 in place of 150, since the nation with which we would 
ultimately equalize would be India with her 230,000,000 of people, 
among which a fall in our wage-rate of 12 cents could only be ex- 
pected to make a rise of 2 cents, owing to their greater number. 

Setting out, therefore, with the axiom, that differences of value 
in labor and all other commodities arise from the relative obstruc- 
tions that exist either in the production or transportation of both 
labor and commodities, between the countries of higher and those 
of lower prices, and that in order to maintain two markets or, 
what is the same thing, two market prices, on one commodity, 
labor, for instance, there must be intermediate obstructions, pre- 
venting a perfectly gratuitous interchange, or free trade, between 
the two markets, we arrive at the conclusion that to countries 
paying high wages and high profits, perfect free trade in com- 
modities involves the simultaneous degradation of labor and 
bankruptcy of capital. 

125. Effect of Military Protection to Foreign Trade 
on Home AVages. — The supposed question between free trade 
and protection is sometimes obscured by confining the discussion 
to one mode of protection, and assuming that countries that do not 
adopt that particular mode of protection, as, e. g. , by tariff, are 
examples of free trade. But a country may send its armies 
throughout the world, invading the territory of every weak bar- 
barian state, planting fortresses in its harbors, and forcing trad- 
ing stations into its rivers, and with its bayonet at the throat of 
500, 000, 000 of people, may plant its bankers in their towns, its ships 
in their harbors, and its flag over every coaling station by which 
ocean-going steamers may reach it. Its bankers may be 
supplied with money and credit at 3 per cent, per annum because 
capital at home is untaxed. Its steamers may be subsidized out 
of the national revenues instead of being left to the earnings they 
can make by carrying cargoes cheaply. With all these wires 
laid and nets spruug, this nation may say to these barbarians "Buy 
where you can buy cheapest, i. e. , of me, or I'll conquer you. I 
will open your ports to commerce with me, and will close your 
factoi'ies and farms to commerce among yourselves, by grape, 
and canister, whether it bankrupts your native industries and 
disorganizes your native labor, or not." This may be called for 
sweetness and purity's sake free trade, but it is the protection of for- 
eign trade by miUtary force. And if, by this forced conquest of 
all foreign markets, so large a foreign trade is built up that the 



MILITABY PROTECTION. 317 

interests of its farmers become subordinate in importance to its 
f oreig-n trade, and it therefore admits foreign corn free of duty, this 
is not free trade, but the sacrifice of its rural industries to an en- 
forced foreign trade. Tlie Empire of Rome was even more ungra- 
cious to the farmers of Italy, since with the proceeds of its for- 
eign conquests it bought the foreign corn and gave it free to the 
citizens, thus rendering it impossible for the fai'mers of Italy to 
raise corn at all. But this was discovered to be no triumph of 
free commerce, but only an armed destruction of home industry. 
It only bankrupted the government, to attempt to give away a 
supply of corn, equal to the cessation of production in Italy, 
caused by the free corn. Instead of cheap bread it brought 
waste lands and a bankrupted peasantry. 

Modern England repeats the Roman example. But of this in 
another chapter. Military protection to foreign trade must not 
be mistaken for free trade. It is a form of protection. It accounts 
for the higher rate of wages maintained in England than that 
which prevails in France and Germany. 

126. Diversity of Industries Essential to High Wages. 
— In a country where few industries are carried on, many persons 
must toil slavishly and spend large portions of time in idleness, 
vice, or crime, or some form of social revolution or war, because 
they fail to find the industry that is congenial to them ; and, on 
the other hand, many people must suffer a severe restriction 
upon all their artistic enjoyments and rarer capacities, because 
they are not brought into contact with good social, intellectual, 
artistic, scientific, religious, and philosophic means of culture. 
Thus prodviction is scanty, and consumption is meagi^e, and of a 
mei'e animal scope and kind. So hard and barren of incident is 
tlie life of herdsmen and shepherds in Australia, that they have 
been known to forget their powers of speech, and degenerate into 
imbeciles, for lack of an opportunity to exchange ideas with their 
fellows. Among a very sparse population the ratio of time spent 
in idleness, physical and mental, so increases, that in a life it must 
often have the effect of enabling a person to live only one year of 
sensations in many years of duration. Compared with such a 
barren and slow life, an active life in town is characterized as 
"fast, "or as '' living many years in one." 

The capacity to "'live fast" arises, therefore, from the diversifi- 
cation of industries. It must not be supposed that, within reason- 
able limits, living rapidly and vigorously shortens life. On the 
contrary, no one fact tends so essentially to lengthen life, as the 



318 ECONOMIC PHILOSOPHY. 

ability to fill up all its moments with transitions from each form 
of exertion to some other, before the pleasure involved in the 
exertion while it is novel shall have degenerated into satiety, 
disgust, or weariness. 

The development of man mentally, morally, and socially is 
therefore the product of diversification of industry. The progress 
of society in wealth-production, only faintly measures his corres- 
ponding increase in the capacity to obtain from wealth tlie enjoy- 
ment it is capable of bestowing, and to infuse into life the joy with 
which it can be filled. In the degree, therefore, that a gov- 
ernment pursues a course calculated to cause sixteen industries to 
be carried on instead of eight, or thirty-two where but for its 
action only sixteen would be prosecuted, it gathers up the idle 
hours of millions of men and women, and consecrates them to 
productive industry, while it brings into their mental culture the 
relief and intellectual profit found in a greater diversity of 
amusements, instruction, and mental commerce. At the outset, 
in a new country, no industry is so profitable as the same indus- 
try would be where all the processes of commerce are established. 
Even farming and fishing, in the early settlement of New England 
and Virginia, involved greater hardship and suffering than 
would have been performed at all, if the fish and food could have 
been got by as small an effort as would have sufficed in the old 
world. Emigrants never go to new countries in seai'ch of ease 
and repose. Every house has to be built, and every farm fenced, 
and every crop reaped, at far greater than the old-world cost of 
time and effort. 

Grradually, however, the new country begins to develop modes 
of industry in which it becomes superior to the old. By dis- 
covering the proper haunts of fish and game the hunting and 
fishing, at first precarious, becomes abundant. Then it is ascer- 
tained that potatoes, tar and rosin, hewing timber for shipping, 
and lime, can be got out cheaper than in the old world. As 
exchanges multiply, profits rise, time and tools become productive, 
and men feel entitled to wages for their time. Profits, however, 
are for the time only obtainable in the ])roduction of those 
things which depend on forest trees, such as tui-pentine, or on 
wild game, such as pelts, or on cheap land. 

At length the country has produced every form of land pro- 
duct, but some of these products require so small a labor to manu- 
facture as, e.g., wheat into flour and flour into bread, and pelts 
into furs, and hides into leather, that the attempt is made, Tlio 



NATURAL PROTECTION. 319 

instant it is made an international competition sets in. Owing- 
to the existence of grist mills, tanneries, and furrier establishments 
in the old woi*ld, and the difficulty of inaugurating the smallest 
new enterprise in competition with one already established, it is 
only a question of freight, on the wheat to England, and on the 
flour back, whether ever a grist mill can be started. Make the 
transportation low enough, and quick enough, and the new colony 
can not grind its own corn, weave its own wool, distil its own 
turpentine, dress its own furs, or even educate its own childreii, 
or hold its own church service. Certain industries, however, find 
a natural protection in the three thousand miles of sea which 
intervene between the new settlers and the countries of old and 
cheap productions. Education is not importable and children 
can not be sent across the seas to be taught, nor can parents cross 
the ocean to pray or attend worship. Hence, the school-teacher 
and clergyman have natural protection, and first among the 
manufactures that grow up are those factories in which 
ignoi'ance of those things which our fathers have known 
is converted into knowledge, and doubt into faith. So buildings 
are not importable, and this fact protects the carpenter. Horses 
must be shod near the farm whereon they draw the plow, and 
this protects the blacksmith. 

At length, however, the country says we have all the ores, 
coal, lime, and other materials to make iron and steel ; and we 
can never introduce these industries at all if we wait until they 
can be started here at a profit, since the time will never come 
when one producing these things in a small way can produce 
them as cheaply as one producing them in a large way. But 
before we can produce in a large way we must produce in a small 
way. Hence, we must produce these things at a loss first, in 
order ever to produce them at a profit. They find by examina- 
tion that this ai-gument applies to far more industries in number, 
and that their value and profits, if inaugurated, would be far 
greater than the entire category of industries on wdiich producers 
have natural protection. Tliereupon they impose such a d\xty on 
the importation of the competing product, as will cause it to be 
superseded by the domestic product. Thereupon they multiply 
the number of industries pursued first two-fold, then twenty-fold. 
There will probably always be those who will argue that tliis 
multiplication of industries does not increase the rate of wages. 
But there will always be a sufficient preponderance of opinion in 
favor of the policy to make it pai't of the inevitable and necessary 



320 ECONOMIC PEILOSOPHT. 

action of every self-governing country, unless we may possibly 
except a country lilce Turkey, which indulges in a religious scruple 
against import duties lest they may have the effect to cause a 
part of the revenues of an orthodox Mohammedan government 
to be contributed by alien infidels and Christian Giaours.* 

127. Exclusion of Iinmigratiou as a Measure to Pro- 
mote Wages. — As wages are the result of a nearly equal 
division, between capital and labor, of the gross earnings of all 
industry, and as all earnings of industry, when ultimately 
analyzed, become exchanges of mutual service, it follows that no 
increase of earnings can be effected by diminishing the number 
of those who in this country exchange service, i.e., by excluding 
new workers, either by preventing births or excluding immigra- 
tion. Wherever the policy of increasing wages, in the whole 
population of a country, by diminishing population, crops up, and 
whatever form it assumes, it is a mischievous error. It results 
from reasoning from a particular industry to the case of all 
industries, forgetting that as industries are the complement of 
each other, what may be the surplus, and hence the poison of 



* One of the ingenious fallacies, by which this manifest dictate of coTnmon prudence 
is assailed, is to assert that the population of a country may be divided into those wlio 
are protected, and those who are not. As well might we assert that the rains of heaven 
benefit those only who are caught out in the sliower without an umbrella. A late free 
trade organ, The Million, which died of inanition, at Des Moines, Iowa, divided the 
workers of the United States into those engaged in agriculture, 7,670,493; personal and 
professional service, 4,074,238; trade and transportation, 1,810,256; manufacturing, 
mechanical, and mining, 3,837,112. It tlien deducted from the manufacturing group 
certain classes of industries, which it classes as not protected by the tariff, such as 
bakers, blacltsniiths, box factory operatives, tinners, millers, butchers, carpenters, 
carriage maimers, tailors, and others, numbering in all 2,147,631. Wherefrom, it 
concluded that the workmen of the United States were divided into: 

Protected , 1,605,253 

Unprotected 15,786,253 

Total 17,392,095 

A like argument might be framed against the protection of forts by counting the few 
who dwell near enough to be immediately under their guns and walls with the vast 
number who do not. The 7,670,493 farmers are cliiefly protected in the fact that while 
tliey produce only their crops, it is consumers only who can produce prices on those 
crops, and a crop without a price is not a commodity, but a discommodity. Whatever 
is the difEerence between the price of a farmer's product on his farm, and at its place 
of consumption, is to the farmer a tax for transportation of his products. This he 
knows can only be removed by a transfer of tlie manufacturing business in its totality 
to near his farm. Whatever removes this transportation tax is to him not a tax, but a 
boon. If protection br.ngs the factory to the farm, and whether it does or not is 
simply a question of fact, to be verified by observation, tlien one might as well classify 
the people into those who are benefited by the sunshine and those who are not, as into 
those who are and are not " protected workers." 



IMMIGRATION AND WAGES. 321 

one becomes the source of supply, and hence the salvation, of 
another. 

In excluding immigrants by wholesale without selection, each 
industry would be excluding its customers in a larger degree 
than its competitors. Suppose that to benefit the wages of shoe- 
makers we exclude all immigrants. An analysis of those who 
would come shows that only one in fifty-eight of the immigrants 
who would come would make shoes. But one in fifty-eight of 
our entire population make shoes. Therefore the shoemakers 
would have shut out fifty-seven customers in order to shut out 
one competitor. But, the fifty-seven customers whom they would 
have shut out would have added as much to the demand, as the 
one excluded shoemaker would have contributed toward the 
supply. All immigration distributes itself among the various 
occupations in proportion to the demand for it ; it is this demand 
that determines the distribution. In doing so, it necessarily 
maintains the adjustment among industries at the most useful 
economic level, and hence can not do otherwise than bring a 
ratio of consumers to producers, in any one occupation, exactly 
corresponding to what it Avould have been had they not come. 

The case of the Chinese formed an exception in this respect, 
since they nearly all followed one or two occupations, viz., 
washing, cooking, domestic sei'vice, and cigar folding, which had 
previously been perfornaed by women. To the extent, however, 
that they became miners, railroad builders, shoemakers, and the 
like, the principle would apply. The resident Chinese, therefore, 
were quick to recognize the advantage which would come to 
those already here from the exclusion of further comers, and 
rejoiced over the event, their argument being "more Chinee, 
less wagee ; no more Chinee, more wagee." 

In the economic sense every new worker, the moment he 
arrives, becomes an American worker, consuming, say, ninety- 
seven per cent, of American products and three per cent, of 
foreign products ; whereas, as a worker in Europe, whose com- 
modity, or the product of whose labor is brought here, he is a 
foreign worker in the sense that he consumes only three per cent. 
of American products and ninety -seven per cent, of foreign prod- 
ucts, the imported product acting only and simply as a displace- 
ment of American by foreign labor, until worn out. 

128. The Barter of Domestic Labor for Domestic La- 
bor Promotes Domestic Wag'cs. — ^The vastly greater em- 
ployment given to domestic labor by consuming objects of domes- 



322 MGOmMlG HttLOSOPHt. 

tic production, and the consequent effect of this policy to promote 
American wages, where the country has its choice between native 
and foreign products, is seen where the raw raaterials and fuel 
used in producing the product in question are very bulky and do 
not admit of transportation to the foreign country, while the fin- 
ished product is very compact and admits of ready transfer over 
long distances. In such cases the country which pays somewhat 
more for the finished product, may make a profit several times 
greater than this loss, in having raw materials, which perhaps are 
the incident of another production, or are the spontaneous gifts of 
nature, raised in value f I'om mere worthless waste substances to a 
value which makes them a leading staple. Thus where a country 
packs its meats, before shipping them, it gives value to its salt, 
sawdust, cooperage, ice, staves, boxes, etc. When it makes its 
paper it gives value to its streams of water, straw, wood, coal, 
bread-stuffs, cornstalks, x'ags, and many other domestic products, 
which it could never sell to the paper-makers of a foreign 
country, but can sell in the form of paper to its own 
people. When it tans its own leather it gives value to oak 
bark, sumach, and a dozen other worthless things. In making 
glass it gives value to clays, sands, mill-sites, coal, and chemicals 
of various kinds. In making iron, it gives value to ores, coal, 
lime, wood, railways, canals, vegetables, and hundreds of other 
unexportable products which could not be sold abroad. 

A man's freedom, in trading straw for paper, depends more on 
the price he can get for his straw, than on that he must pay for his 
paper. If all trade is barter, as contended by the advocates of so- 
called free trade, when a choice is offered between the foreign 
article and the domestic, the interest, as it appears to the individual 
buying the paper, may not be identical with the interest as it actu- 
ally is to the nation as a whole. For, to the buyer, it is not barter 
at all, but a purchase for money. But, to the nation at large, it is 
bai'ter, and will be paid for in commodities, with the difference 
that, if it be American paper, it can be bartered for by giving any 
one of a thousand domestic products in exchange, including land, 
labor, instruction, fuel, vegetables, hay, clay, brick, lime, sand, 
rocks, fruits, forest trees, etc. ; but if bought abroad it can be paid 
for only in cotton, wheat, beef, or pork. Though the domestic 
price may range higher than the foreign (an incident to protec- 
tion which is by no means invariable), yet the trade or commerce 
in the domestic article is freer, at the higher price, than the trade 
in the foreign at the lower price, because, in the latter case, the 



SOCIAL ESTEEM AS WAGES. 32S 

• actual privilege of barter, when it comes to be applied as it must 
always be in fact, allows the domestic paper to be paid for in 
either of several hundred or a thousand articles, in which the 
foreign paper can not be paid for. 

It was, moreover, very truly pointed out by Adam Smith that 
the domestic paper gave employment to two domestic capitals and 
two domestic sets of laborers, viz. , those employed upon the paper 
itself and those employed upon the product given in exchange for 
it, while the foreign paper give semployment to only one domes- 
tic capital and one force of domestic labor, viz., that employed 
upon the product given in exchange for the paper. 

'129. Wages of Social liabor.— The distinction is made by 
some economists '^ between the wages paid by the profit-makers, 
and which are paid from motives of profit only, and those which 
are paid for domestic professional and official service. 

Many of the most useful services to mankind, however, are 
compelled upon economical principles to be rendered gratui- 
tously. No capitalist could afford to pay a Copernicus to discover 
the ti'ue theory of the solar system, partly because he would be him- 
self unable to discover the Copernicus, and partly because the num- 
ber of men who desire to perform as great a service as Copernicus, 
and who, with perhaps equal ability, will fail in doing more than 
propound a chimera, is so great that the ambition to do great 
things for mankind needs rather to be checked than encouraged ; 
since, with most men, the ambition can lead only to great inutil- 
ity and bitter failure. Hence I am unable to agree with Mr. 
Elder's ingenious hypothesis, that social services of great spiritual 



* Cyrus Elder, in '■'■'bILa.n and Labor," p. 64, Bays: " As to that more important, 
because more largely productive lazier which directly originates immaterial utilities 
only, the natural law of its reward is not so obvious. It can not be paid with the whole, 
or a part of its product. The doctor who cures a patient can not be paid in health ; the 
professor who educates a pupil can not be paid in knowledge ; the jurist can notbe paid 
with a part of the principle of justice which he establishes. Looking at our ascending 
and widening column of labor, and considering all that is involved in it with reference 
to the teachings of history, we conclude that men naturally tend to rate this higher 
labor as to its honors and rewards according to the proportion in which it performs a 
social use. That labor which serves the whole community in its protection, direction, 
leadership, ranks highest; and this order descends by degrees, through service to smaller 
numbers, until it ends in that labor which, performing a material use only, is governed 
by another and different law of compensation. 

" The analysis we have made corresponds broadly to the social degrees, distinct, yet 
overlapping each other ; the first and lowest, in which labor fixes itself in things ; the 
second, in which labor fixes itself in institutions ; the third and highest, in which labor 
fixes itself in man. It is just in the proportion that this last and highest form of labor 



324 



ECONOMIC PHILOSOPHY. 



utility are necessarily paid for in lofty material rewards. The 
utmost that could be said is that there is a crude sort of justice 
in the degree in which the economic value of intellectual service 

prevails that productiveness increases, and that man ipcreases in value, while institu- 
tions and things decline in value and increase in utility. 

" As to institutions— the state and the church— these in a progressive society ohey the 
same law of declining values and increasing utility. In the ruder conditions of life, as 
n the early periods of history, the community is exhausted in the effort to preserve it- 
self. The head of the state requires and has control of the lives and labors of the 
people. The value of government, is enormous, its utility small. The like holds good 
as to ecclesiastical institutions, the machinery of which in the ruder stages of society is 
infinitely costly as compared with the services which it renders. An illustration in the 
form of diagrams may be helpful, and will at least provoke criticism. Let the following 
ascending columns represent the stream of history : 

POLITICAL INSTITUTIONS. 



Free Government. 



Limited Monarchy. 



Despotism 



Utility. 



Val ue. 



Taxation under General Laws. 



People have a voice in imposing 
taxes. 



Li fe and Labor belong to the 
Kuler. 



ECCLESIASTICAL INSTITUTIONS. 



Free Church. 



Clerical Hierarchy. 



Supreme Pontifical 
Power. 



Utility. 



Value. 



Voluntary Support. 



Government Support, Tithes, etc. 



Human Sacrifice. Lands ab- 
sorbed by the Clergy. 



WOlIEIf AS WORKERS. 325 

corresponds generally to its material reward. Yet the wife and 
children of the inventive Goodyear were buried by charitable 
contribution, and the magnificent invention of telegraphy left 
Prof. Morse to be provided for by the donations of his friends. 
While the children of the artist-inventor have derived a modest 
income from the cultivation of flowers upon the estate presented 
to him by his neighbors, the vast invention he bequeathed to the 
world, and no small share of the great fortunes to which it has 
given rise, have become the property of one who is known to the 
patent office only as the inventor of a mouse-trap. Social labor 
of the highest value is paid in a currency of its own, when it is 
paid at all. But much of it is wholly unpaid. The fame of great 
usefulness settles often, like a mantle, on the complacent shoulders 
of entertaining charlatans and eloquent impostors, and the men 
who most convulse and shake society, by their blunders, are as often 
laid to rest under the heaviest burden of the flowers of social 
esteem. 

130. Wages of Women. — Women offer themselves in a 
limited number of occupations, rejecting usually the coarse, vul- 
gar, enterprising, arduous, and dangerous. In clinging to occu- 
pations which are deemed becoming to woman as a sex, they 
come chiefly into competition with those women who, as members 
of a household, can, if necessary, perform the same work, in a man- 
ner which has the efi'ect of gratuitous competition, since the lat- 
ter will receive the same support and maintenance, if they do not, 
as if they do work. 

It may well be questioned whether society can afford to adopt 
the theory that woman ought to, or can, with average profit to 
herself or to men, be a self-supporting competitor in the labor 
market. It could only be avoided by returning to the Roman 
idea of the family, whereby a woman could not, by the death of her 
husband or father merely, be thrown on her own exertions for 
support. She was still a member of some Roman household or 
gens, and entitled to its protection while rendering it her service 
and obedience. Perhaps, in our modern life, there are many 
women to whom even the restraint of a family relation, selected 
by choice, seems unbearable, and who would not be grateful for 
a title to dependence on a relative moi'e distant than husband, 
father, or son. There are, however, many cases of sisters, ruth- 
lessly thrust out vipon the world, whom it is within the power of 
their brothers to support ; of nieces in severe straits, whose uncles 
are in affluence and the like. The gi'owing disintegration of the 



326 ECONOMIC PHlLOSOPlIT. 

family, and the facility of divorce and remarriage, operate in 
some instances to reveal to woman a capacity of self-support 
and of independence far more enjoyable than any support she 
would have as a wife. In other instances, the end is as painful as 
it could well be. 

There are many circumstances which render a woman's work, 
year by year, less valuable to her employer than that of a man, 
even where she performs much of the work equally well. Her 
prospective marriage constantly threatens to terminate her work, 
while the marriage of a man confirms his steadiness as a worker. 
She does not enter the bolder and more riskful as well as gainful 
occupations, wherein her product and not her labor is sold, such 
as farming, house-building, and manufacturing, and from which, 
therefore, it would not be practicable to exclude her by mere 
opinion. Yet among the women who do enter these managing 
occupations, there are many that evince the highest skill. In 
1880, in the United States, 14,744,942 males and 2, 647, 157 females 
were working for gain out of a total of about 26,000,000 persons 
of each sex. About one in ten females and three in five males 
are toilers for hire or profit. In New York, out of 2,031,369 fe- 
males over ten years of age, there were 360,381 money-makers, 
while a male population of 1,960,059 contained 1,524,264 toiling 
for gain. There were, therefore, 1,670,988 women and 425,795 
men not productively employed, or whose toil was not for 
sale. 

Each man at work supports one woman, and every four men at 
work support one idle man; every fifteenth man supports two 
women, and four-and-a-half women are supported by men where 
one even tries to support herself; 2,247 women and 375,213 men 
do some kind of farming or manage farms. Although land de- 
scends equally to daughters and to sons, and though there can be 
no discrimination on account of sex against woman as a farmer — 
since it is the product and not the labor that is sold, and no one 
buying hay or horses can tell whether a man or a woman raised 
them — yet only one farmer in 180 is a woman, and in most 
cases she is a farmer only temporarily, while she is a farmer's 
widow. 

In professional and personal service — the life nearest like that 
of a wife or daughter in the household, as it involves no risk and 
little heavy toil, and gives wide room for personal favor in selection 
— the women rise to 205, 829 in New York and the men to 332,068. 
How closely women in their choice of work adhere to the family 



WOMANLY WORK. 327 

order, even when out of the family, is shown by the fact that in 
the United States 12,294 women to only 1,189 males find work as 
nurses, 108,198 women to 13,744 men work as launderers, 938,910 
women to 136,745 men work as domestic servants, 1,615 women 
to 781 men work in charitable institutions, 12,313 women to 6,475 
men keep boarding-houses, and 13,182 women to 17,255 men teach 
or live by music. On the other hand, in trade and tz'ansportation, 
in New York, there are 324,304 males to 15,215 females. In m.anu- 
factures, mechanics, and mining, there are 492,674 males and 
137,190 females. Thus, women seeking employment gravitate 
toward the family type in their selection, and virtually say: " If 
we cannot have households of our own, we will toil as nearly in 
the household as we can. " 

The industrial question is, therefore. How many women outside 
the family can be employed in a manner essentially like employ- 
ment in the family ? Woman's ofPer of labor in the market is not 
free as is that of a man — " I will do all work," but is encumbered 
by this condition: " My work must be womanly woi'k; i. e., it 
must resemble as nearly as possible that which woman performs 
in the family." But woman in the family is a gratuitous worker, 
i. e., she works for love, affection, and favor, and takes her pay 
in kindness, generosity, and indulgence, and not in wages. Hence 
the 360,381 women in New York, who offer to toil for hire, really 
offer to compete with and underbid the 1,670,988 women, or many 
of them, Vv^ho ask no wages, and can at a pinch do the same things 
without pay, which the toilers are trying to earn pay for doing. 
In domestic service, the competition is not so much between one 
cook and another, as a choice, by the matron of the house, whether 
she will hire a cook or do it herself. Hence nearly every woman 
works against an unpaid competitor. For though the wives and 
sisters, daughters and mothers, of the well-to-do in America 
especially, are the conspicuous and accepted centers of all luxur- 
ious and aesthetic living, yet as all this is done for favor, their 
influence, in controlling and depressing the price of the labor of 
the women who are compelled to work, is very nearly, especially 
in periods of adversity, that of a vast fund of gratuitous compet- 
ing labor. Such a fund, whether it take the form of machinery, 
foreign pauper labor, or " ladj' " labor ready to become " help " 
on demand, can not fail to exert a depressing influence on the 
wages of the class whom it affects. 

The occupations selected by women are also usually those in 



328 ECONOMIC PHILOSOPHY. 

which combination by workmen to raise wages is less effective.* 
But even where women are engaged in work in which unionism 
may be made effective, they have only very recently begun to 
take part in the unions. 

* Cost of strikes and results. The Textile Hecord, of Philadelphia, for February, 1888, 
presents the following : The following shows the number of strikes that occurred 
ia this country in each of the successive years: 1881, 471; 1883, 454; 1883, 478; 
1884, 645; 1885, 1412. These involved 22,356 establishments in all. In 1887 about 853 
strikes occurred, but full details are not at hand. During the period named. 
New York State had the largest number of establishments affected by strikes 
and lock-outs, the wiiole number beii\g 10,775. Of the strikes about 47 per cent, 
succeeded; about 13 per cent, were partially successful, and 40 per cent, failed. 
In the six years the losses incurred are estimated as follows : to strikers, $51,- 
816,165 ; and to locked-out persons, $8,132,717, a total wage loss of $59,948,882. 
This makes a loss of about $40 to each striker. Losses to employers in six years, 
$34,164,914. The disturbances occurred mainly in 13 industries, namel}-, boots and 
shoes, bricklaying, building, clothing, cooperage, food preparations, furniture, lumber, 
metals, mining, stone, tobacco and transportation. Out of the 23,336 establishments 
engaged, building trades furnished 6,C60, or more than one-fourth. The total number 
of employees involved during the six years was 1,318,624. The number employed in 
all the establishments before the strikes was 1,662,045; afterwards. 1,636,247, a loss of 
25,798. There were 103,038 new employees engaged after the strikes. Of the whole 
number engaged in striking, 88.56 per cent, were males, and 11.44 per cent, were 
females. New York, Pennsylvania, Massachusetts, Ohio and Illinois contain 49 per 
cent, of all the manufacturing establishments in the country, and 58 per cent, of the 
capital invested in such industries. In them about 76 per cent, of the strikes and 91 
per cent, of the lock-outs occurred. Of the strikes, 82 per cent were ordered by labor 
organizations. The remarkable increase of the number of strikes in 1886 seems clearly 
to be due to the activity of the Knights of Labor. 



CHAPTER IX. 

MONEY. 

131. What Is Money? — Money is that for which all men 
will sell or serve ; the one commodity for which all others 
exchange. As language is the one idea which expresses all 
others, so money is the one value which states, measures, and 
transfers all others that can be stated, measured, or sold. The 
functions of money are to hoard, exchange, preserve, estimate, 
state, and distribute values ; to induce, organize, employ, and re- 
ward free labor ; to stimulate human effort to its highest capacity 
in the production of wealth, and to the most equal possible dif- 
fusion of wealth among men, for enjoyment. Through it, as an 
economic agent, the instinct of accumulation or gain in man is 
propelled forward in industry, invention, discovery, investiga- 
tion, art, science, religion and philosophy, charity and philan- 
thropy, law and government, until by it, as an economic force, 
man is evolved out of slavery into freedom, out of idleness into 
industry, out of poverty into wealth, out of barbariq superstition 
into enlightened scientific knowledge, and out of crime and vice 
into refinement and mutual kind services, and reciprocal friendly 
regard and love.* In thus outlining the economic functions of 



* Mr. Jevons, in his work on " Monej'," seems to regard the term money as too vari- 
able in its meaning to be capable of definition, since it applies, he says, " to bullion, 
standard coin, tolicn coin, convertible and inconvertible notes, legal tender and not legal 
tender, cheques of various liinds, mercantile bills, exchequer bills, stock certificates," 
etc., each of which "requires its own definition." To this Mr. Sidgvvick replies that 
it implies that it is logically correct todefliieanumberof species where it would be logi- 
cally erroneous to try to define their common genus. ("The Principles of Pol. Econ." 
p. 230.) Mr. Jevons distinguished four functions which money fulfils in modern socie- 
ties. It is (1) a medium of exchange ; fS) a measure of value ; (3) a standard of value 
[i. €., as Mr. Walker saj s, a standard for deferred payments] ; (4) a store of value. 

Mr. Sidgwick adopts, approvingly, the definition given by F. A. Walker in " Money, 
Trade and Industry," p. 4, viz. : " that which passes freely from hand (owner) to laand 
(owner) throughout the community, in final discharge of debts and full payment for 
commodities, being accepted equally without reference to the character or credit of the 
person who offers it, and without the intention of the person who receives it to con- 
sume it. or enjoy it, or apply it to any other use than in turn to tender it to others in 



330 ECONOMIC PHILOSOPHY. 

which money is the essential instrument, the economist is not 
called upon to define the spiritual forces and metaphysical pow- 
ers, human and divine, which make use of this instrument, still 
less to substitute one for the other. The analysis of these forces 
constikxtes a field of investigation sufficient to tax and exhaust 
the utmost powers that can be applied to it. A few economic 
writers have sought to strengthen their discussion of economic 
questions by asserting that economic science can only lead to 
right conclusions, accordingly as it is subordinated to some par- 
ticular school of thouglit in metaphysics.* 

The conception of this treatise is to remit religious, moral, meta- 
physical, and theological inference and discussion entirely and 
absolutely to those works and persons which make these depart- 
ments of thought their specialty. 



discharge of debts or payment for commodities." A convenient summary of this 
definition would be, " Money comprises all current means of payment and purchase." 

Hume says: "Money is not, properly speaking, one of the subjects of commerce. 
but only the instrument which all have agreed upon to facilitate the exchange of one 
commodity for another. It is none of the wheels of trade : it is the oil which renders 
the motion of the wheels more smooth and easy." 

To this Carey (" Principles," condensed by McKean,p. 352) says: " Had he, however, 
found it asserted that corn, wine, and the flesh of sheep and oxen, had been ' agreed 
upon ' by men as the food they were to use, he would certainly have asked for some 
evidence that they really had come to such an agreement, and had not been led to act 
as they do, by the fact that such commodities had been provided by the Creator for 
men, while creating food of other descriptions for the nourishment of cows, horses, 
f heep, and other animals. He would naturally have asked the question — ' Suppose 
they did not eat these things, what others could they eat ? ' and when the answer had 
been made, that they must either eat of them or perish, he would have regarded it as 
evidence that their course had been determined by a great law of nature, and had not 
been ' agreed upon ' by themselves." 

Roscher ("Pol. Econ.," Bk. ii. ch. iii. §cxvi.) says: " Such a commodity, universally 
in favor, and which, on that account, is employed as an intermediary in the efiecting of 
exchanges of the most varied nature, in the measuring of all exchange values, and as a 
value-carrier in time and space, we call money." 

Tlie question, whether the term money shall be deemed to be confined in its proper 
signification to coins of gold and silver, or shall extend likewise to any generally ac- 
ceptable means of payment, depends on the connection in which the term is to be used. 
In a question of legal interpretation, as where the Constitution of the United States 
clothes Congress with the power to " coin money and regulate the value " (weight and 
fineness) thereof, it would be mischievous to hold that paper money was here intended, 
as that is incapable of being coined. But if the question be as to the volume of money 
which regulates prices, as in the article on " Commercial Crises," by Horace White, in 
"American Cyclopedia of Political Economy," it is equally erroneous to make gold 
bullion, or even coined gold, the sole money. 

* C. S. Devas, in " Groundwork of Economics," following Sisraondi, subordinates 
economics to Catholic ethics, and Chalmers, Wayland, and Mill reflect their metaphys- 
ical and th'ological bias in their economic discussion, 



MONET BEGINS AS TREASURE. 331 

To perform tlie functions above outlined, money must be an 
article attractive in its uses and compact in its quality, or it can 
not first be hoarded as treasure. It is the tendency of barbarous 
tribes and simple minds to hoard a metal, and to deem it precious, 
that gives it its first requisite for use as money, viz., general ac- 
ceptability. Silver in India, to-day, is found performing this first 
simple function of mere treasure, i. e., of hoarding. The severity 
of famines is often measured by the degree in which the silver 
ornaments of the ryot are offered for sale, or for coinage 
at the mint, to purchase food, for among the Mahometans and 
Hindoos the holiday costume becomes a sort of savings bank.* 
This seeming extravagance of dress is really parsimony and econ- 
omy, and rebukes those simple-minded persons who wonder at 
the folly of barbarians in investing largely in ornaments instead 
of clothing. In times of distress white muslin and kid gloves 
would not procure them as many pence as their silver ornaments 
would pounds.! The transition of the precious metals from 
hoarded treasure into medium of exchange, and, perhaps, back 
into hoarded ti^easure, took place in a marked way at the capture 
of the treasure hoards of Asia by Alexander, of Mexico by Cortes, 
of Peru by Pizarro, and, to some degree, occurs daily. 

The metal for use as money needs, next after being treasure, to 
be malleable, so that it may easily receive the coinage stamp that 
shall indicate its weight and fineness, and dispense with the ser- 
vices of an expert at every trade. Diamonds, therefore, while 
attractive, and invaluable as a means of storing wealth, are of no 
use as money, since they cannot be stamped at all, nor can they 
be divided without a great loss of value. 

The moment an acceptable article is arrived at, into which all 
other values can be translated at will, all other commodities, and 



* " Groundwork of Economics," by Devas, p. 413. Monier Williams, " Modern In- 
dia," 2d edit., p. 30. 

t Devas, " Groundwork of Economics," p. 414, says : " The average tender of silver 
ornaments every month, at the Bombay Mint, before the year 1876, was £600 ; but in 
November, 1876, owing to the famine, it reached £7,000, shot up to £100,000 in Decem- 
ber, and then kept steadily rising till, in September, 1877, it reached £189,754, and the 
total for the two years, 1877 and 1878, was £1,946,158 {Quarterly Review, April, 1879, p. 
389). Le Play gives examples from Russia and Turkey of peasant women wearing mul- 
titudes of silver coins in their dress. And gold and silver ornaments have been conspic- 
uous in many of those peasant costumes of Europe, which grew up when the mediaeval 
sumptuary laws fell into decay. So, in Friesland, the golden cap of the peasant women 
is worth .300 gulden, or about £25. In Portugal they wear jewelry of Moorish designs 
worlh from £5 to £30." 



332 ECONOMIC PHILOSOPHY. 

especially labor, offers itself iii the market, and commerce among 
men, or the exchange of mutual services, begins. The instant 
the article ceases to be generally acceptable, commodities and 
services are hoarded in lieu of money, and commerce stops. In 
the case of labor-capacity, to hoard it is to waste or lose it, since, 
if not employed or exchanged at the instant of production, each 
hour and moment of labor-capacity is lost forever. Hence any 
cessation in the efficiency of money involves and includes a cor- 
responding cessation in the rendition of voluntary mutual ser- 
vices by men to each other. If mutual services are rendered at 
all, they must then be rendered from some emotional or relig- 
ious reason, or from compulsion or force. 

Money is thus the economic spring which moves all voluntary 
industry, the mediator that effects every exchange, the agent that 
employs all free labor, and the medium in which all worth is 
stated and paid for. Without it, little emulation would be possi- 
ble, and hardly any excellence would be sought, or civilization 
attained. It bears the same relation to human commerce as the 
blood sustains to the body, or the circulation of plants to their 
life. It is the most useful of purely physical agents in industry. 
It ranks only next below the metaphysical principles of the hu- 
man soul as a force in economics. So, in nature, water is perhaps 
the most fruitful of purely terrestrial agents in promoting growth. 
Yet it ranks below the mysterious potency of the sunlight, in 
whose immediate generative action all life finds its birth. 
Money is below man in social utilitj^, as moisture ranks below 
the sun's ray in vegetative utility. Yet, in our efforts to define 
the limits of its potency, let us not fall into the error of under- 
stating or denying its value. Let us, rather, magnify man by 
showing his capacity to comprehend money, than belittle him by 
training him to denounce it. So the poet tacitly praises the sun- 
light, without mentioning it, when he utters that beautiful trib- 
ute to water, since none of the powers he attributes to water could 
be manifested did not the sunlight bring them into action : 

Pure element of waters, wheresoe'er 

Thou dost forsake thy subtei-ranean haunts, 

Greeu herbs, bright, flowers, and berry -bearing plants 
Else into life, and in thy train appear ; 
And through the sunny portions of the year, 

Swift insects shine, thy hovering pursuivants. 

But when thy bounty fails, the forest pants. 
And hart, and hind, and hunter with his spear 
Languish and droop together. 



CAPTURE PRECEDES TRADE. 333 

All these powers are noue the less inherent in water because 
they imply the superaction of the sun's ray ; so all the powers of 
money are none the less inherent in money itself, because they 
imply and presuppose the superaction of man as a thinking, will- 
ing, acting being. As the action of water, however, can be elu- 
cidated without agreeing upon any particular theory of light, so 
the economic action of money does not necessarily imply har- 
mony in the theories we may entertain concerning man's meta- 
physical nature. 

133. Origin of Money. — It is usual, or frequent, among 
economists to assert that trade began with barter, and that trade 
by barter gradually gave way to trade for money. This suppo- 
sition was rendei-ed plausible by the fact that Europeans, trying to 
trade with the savages, found gold and silver money not avail- 
able, and had to resort to barter. As barter, however, instead of 
being simpler than trading with money, is much more difficult, it 
seems likely that seizure by force or piracy, and plunder, and not 
barter, is the real precursor of commerce. Savages would never 
try to overcome the difficulties of barter, since until money is 
introduced there are no terms in which values can be thought of, 
and hence the notion of equivalence of value in commodities 
which underlies barter can not be entertained. The fact that 
surpi'ised Stanley, in going down the Congo, was that the natives, 
beyond the region where money was in use, had no conception 
of barter, and no use for a stranger except to eat him. In attempt- 
ing to barter with them, he had to arrange the terms of the trade, 
and then, by fighting, compel them to make it. He was a pirate, 
who paid for his captures. 

It is clear in Homer that, before money was in use among the 
Greeks, the value of things was estimated in oxen, as it would 
now be in pounds or dollars, and sometimes oxen were used in 
payment.* But at the period of the wi-iting of the narrative of 
Abraham's purchase of the cave of Macphelah for ' ' shekels of sil- 
ver, current money of the merchant," silver had come into gen- 
eral use as money. 

* MacLeod, " Principles of Econ. Phil.," Vol. i. p. 186, cites as follows ; "Thus we 
have, Iliad, vii. 468 : 

" ' Prom Lemnos' isle a numerous fleet had come 
Freighted with wine . . , 

All the other Greeks 

Hastened to purchase ; some with brass, and some 
With gleaming iron, some with hides, 
Cattle, or slaves.' 



334 EGONOMIG PHILOSOPHY. 

In Judea, at a very remote antiquity, gold was familiar, as it 
was also to the red race in Egypt, since they made war upon Nubia 
and Ethiopia for possession of the mines.* 

Singularly enough the date of banks, and paper money, seems to 
be coeval with that of coin. The Chinese claim to have records 
of the issue of ' ' flying money " as eai4y as 2697 B. C A speci- 
men, said to have been issued in 1399 B. C. , is in the Asiatic 
Museum in St. Petersburg, printed in blue ink on paper made 
from the fiber of the mulberry tree. The Chmese bills bore the 
name of the bank, number of the note, value, place of issue, date 
and signature of the proper bank officers. The value was ex- 
pressed in figures, words, and in some cases in pictorial represen- 
tations showing coins or ingots equal to the face value of the 
paper. In the Metropolitan Museum of Art, New York, are 
Babylonian tablets of banking transactions of the year 601 B. C, 
or the reign of Nebuchadnezzar. They record loans made in 
silver shekels, drafts, pledges of security, etc. 

Probably the period at which iron was used in Sparta, as money, 
followed naturally upon that in which oxen were used through- 
out Greece, as described in Homer. Certainly the Spartans- 
passed to silver and gold as their prosperity increased. Copper 
was at first the sole money of ancient Rome, and the same word 
continued to denote both money and copper, long after gold and 
silver had to a great extent supplanted it.f In England, silver 
was coined by the government for many centuries before gold, 
which latter was first coined to a limited extent in the reign of 
Henry III., but has been the prevailing metal in England for 
most of two centuries past, and especially since 1816, when 
England adopted the single standard by making gold its sole 
money of unlimited legal tender. 

133. The Form of Money. — Money, when considered 
with reference to the basis on which it circulates, may be 
conveniently divided into (1) coin or value money, (2) paper or 



" In II. ii. 448, Minerva's shield, the ^gis, had 100 tassels, each of the value of 100 
oxen. In II. vi. 234, Homer lauglied at the folly of Glaucus, who exchanged his 
golden armor, worth 100 oxen, for the bronze armor of Diomede, worth nine oxen. In 
II. xxiii. 703, Achilles offers as a prize to the conqueror in the funeral games in 
honor of Patroclus a large tripod whicli the Greeks valued among themselves at twelve 
oxen, and to the loser a female slave, which they valued at four oxen ; and in the 
same book, 883, Achilles stakes a spear and a cauldron worth an ox." 

* Brughsch's " Eg>pt under the Pharaohs," Vol, ii. j), 81. 

t Shadwell's " System of Pol. Eeon.," p. 256. 



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FORMS OF MONEY. 335 

credit money, and (3) money of account or money which exists 
only in mental conception or idea. The first is value, the second 
is a promise concerning- value, the third is a mental recognition 
of value in some commodity exterior to itself. Coined money is 
again divided into standard coin and subsidiary coin, which is 
also usually token coin. Paper or credit money is further 
divided as to its condition into redeemable and irredeemable, and 
as to its mode of issue into that issued by g'overnments, by banks, 
and by individuals or firms. Money of account is the unit — 
pound, dollar, franc, or marc — into which the legal concep- 
tion of money embodies itself. Some forms of money cross 
these lines of division and partake of the nature of two or more of 
these kinds. Grold certificates, and certificates as issued by the 
United States Treasury, and all Bank of Englaiid notes issued on a 
direct deposit of an equivalent sum in coin, are not so much credit 
money as paper representatives of coin. A credit is given to 
their issuer, but only to the fact that he has the coin for which 
these were issued. This is much less a credit than the general 
trust that government will redeem a note, which it is known to 
have issued because it had not the coin on hand to redeem it 
with. Again, bills of exchange are at times credit money, and in 
so far as they offset and extinguish each other without the use 
of actual money, they make "money of account "not merely 
the idea of money but the substitute for money. 

Money, whether of coin or paper, when considered with refer- 
ence to its status in the law, is either legal tender or not legal 
tender ; and, if legal tender, it may be so to an unlimited, or to a 
limited, amount. Money of whatever kind, considered with 
reference to the degree of esteem in which it is held, relative to 
some other form of money, may be at par, or at a discount. All 
money, considered with reference to the relation of the country 
where it is issued to the country in which it appears, is either 
foreign or domestic. 

134. The Substance of Coins. — The material of which the 
higher class of coins is made, gold or silver, prior to being coined 
is called bullion. Bullion rises and falls in value, according to 
the ratio of the supply of the article to the demand for all pur- 
poses, including that of coinage, and also according to the abun- 
dance of the means of purchasing it, among which the various 
forms of credit and of credit money may be part. Money coined 
is not of invariable value relatively to commodities, but its value 
is far less variable than the bullion of which it is made. For, 



^36 ECONOMIC PHILOSOPHY. 

when coined, it has two sources of value, viz. , the intrinsic value 
of the bullion included in the coin, and the value arising- from the 
credit of the government. This credit is impressed upon the coin by- 
its stamp, in connection with the statutes defining- the uses to which 
the coin may be legally put. These may maintain, at par with 
any coin of like denomination, a coin the value of the bullion in 
which may be much less than the face or par.* Nor is it true 
that the coin which is made of a relatively depreciated metal, and 
which is held at par by the credit of the government issuing it, 
falls, as some supi)ose, to the value of the bullion it contains, the 
instant it is taken to another country. For, though the statutes 
under which it is issued have no direct efficiency abroad, to com- 
pel people of other countries to take it at par, yet, if they invest it 
with a satisfactory degree of credit, it will circulate abroad, if it 
circulates at all, at the same value as it circulates in its own 
countrj^, less only the small "shave," or profit which a broker 
will ask to send it home for exchange. 

The standard coin, of any country, is that in which its statutes 
make all public and private obligations, and dues, receivable and 
payable, to any amount. The silver dollar and gold dollar are 
alike standard coins of the United States, since the entire national 
debt, all customs dues, and all private debts, are legally payable 
in either. But no silver coins are standard coins of England since 
1816, though silver coins only are standard in India. Silver is 
also legal tender by the banks in redemption of their bills in Scot- 
land and Ireland. But certain silver coins are legal tender in 
England for private debts not exceeding £5. 

In France, Germany, and Italy, silver coins are legal tender 

* Count Rosconi, delegate from Italy, at the Paris Monetary Conference of 1878, thus 
expressed this point. ("Inter. Mon. Conf. 1878," p. 61) : "A metai is one thing," he gaid, 
" but money is another. Nature makes the metal ; law alone makes the money. If the 
uncoined metal is subjected as merchandise to all the accidents of supply and demand, 
all the variations of the market, the coined metal being no longer a merchandise, but 
having legal-tender power, has a price which does not vary. In a piece of metal, 
coined according to certain rules as to alloy, impression, size, shape, weight, the law 
becomes in a manner incarnate. It gives it the power of paying obligations, a virtue, a 
price which the metal-merchandise could not obtain. It is not wrong to say that silver 
rises and falls in the market; in the territory of the state, where the law reigns and 
governs, the value of the coin does not change. Our countrymen would be greatly 
astonished if they were to be told that the five-franc piece which they laid by in 1873, 
which they put into a savings-bank or kept in their chests, has in the last five years 
performed all the somersaults outlined in the very instructive table which the Director 
of the Administration of Coins and Medals of Paris has kindly communicated to the 
conference. The metal changes in vahie, it is true ; but as long as the state maintains 
itself the coin does not change ; it has, actually and efEectively, the value which is indi- 
cated by its imprint." 



THE DOLLAR. 337 

for public and private debts to an unlimited amount, but in Ger- 
many the coinage of silver is i-estricted to a certain sum, and in 
France and Italy, the coinage of silver is at iDresent suspended. 

The standard dollar of the United States is a coin whose emblem- 
atic stamp, on both sides, is prescribed by act of Congress. If of 
gold, it must contain, when stamped, 25.8 grains, ^jj fine, 
i. e., nine-tenths of its weight must be pure gold and one-tenth 
alloy. It must have a diameter of |-1 of an inch and a thick- 
ness of xioiT of an inch. 

If of silver, it must contain, when coined, 412J grains of 
standard silver, y^ fine, being 371i grains of pure silver, and 
is 1^ of an inch in diameter, and ygU^ of an inch thick. The 
act creating the silver dollar * made it weigh 416 grains (in- 
stead of 412 J), but it contained 37J grains of pure silver, as 
now, that element never having been changed. A reduc- 
tion was subsequently made by statute in the weight of alloy. 
No gold dollar piece was at first authorized, but the eagle, or ten- 
dollar piece, was to contain 270 grains of standard coin and 247.5 
grains of pure gold. One gold dollar would, therefore, have 
weighed 27 grains, and would have contained 247.5 grains 
of pure gold. Fifteen times 24.75 gi^ains gives 371J grains, the 
weight of pure metal in the silver dollar, making the ratio between 
the pure metals in our coins 1 to 15 — the ratio being estimated on 
the pure metal and not on the standai'd weights in the coins, f 
This was the ratio recommended by Hamilton's report on the 
establishment of a mint,]: but attained in connection with a differ- 
ent measure of alloy. By introducing about one-ninth instead of 
one-twelfth alloy as i^ecommended by Hamilton, Congress raised 
the weight of the standard dollar to 416 grains instead of 405. 
England, Spain, Poi'tugal, and France then put an alloy of one- 
twelfth of the total or standard weight into their gold coins. § 
Besides the dollar, the other coins of the United States are the 
double-eagle, eagle, half-eagle, three dollars, and quarter-eagle, 

* Passed April 2, 1792. 

t" History of Bimetallism in the United States,'' by J. Laurence LaugWin, p. 21. 

t Dated May 5, 1791. Hamilton recommended as follows: "That the unit in the 
coins of the United States ought to correspond with twenty-four grains and three- 
fourths of a grain of pure gold, and with 371 grains and one-fourth of a grain of pure 
silver, each answering to a dollar in the money of account." The former is exactly 
agreeable to the present value of gold, and the latter is within a small fraction of the 
mean of the two last emissions of dollars, the only ones which are now found in com- 
mon circulation, and of which the newest is in the greatest abundance. The alloy in 
each case to be one-twelfth of the total weight which will make the unit tweuty-seven 
grains of standard gold and 405 grains of standard pilvcr. 

§ "Bimetallism," by Langhlin, p. 21. 



33S 



ECONOMIC PHILOSOPHY. 



the first five being made of gold only, the last of either gold or 
silver. The standard coins of other countries are shown by the 
following table published by the director of the mint: 

ESTIMATE OF VALUES OF FOREIGN COINS, 
JANUARY 1, 1885. 



Country. 



Argentine Republic 



Austria 

Belgium 

Bolivia 

Brazil 

British Possessions 
in North America. 
Chili 

Cuba 

Denmark 

Ecuador 

Egypt 

France 

German Empire 

Great Britain 

Greece 

Hayti , 

India 

Italy 

Japan 

Liberia 

Mexico 

Netherlands 

Norway 

Peru 

Portugal 

Kuesia 

Spain 

Sweden 

Switzerland 

Tripoli 

Turkey 

U.S. of Colombia. 
Venezuela 



Monetary unit. 



Peso 

Florin 

Franc 

Boliviano 

Milreis of 1,000 reis. . . 

Dollar 

Peso . 

Peso 

Crown 

Peso 

Piaster 

Franc 

Mark 

Pound sterling 

Drachma 

Gourde 

Rupee of 16 annas 

Lira 

Yen 

Dollar 

Dollar 

Florin 

Crown 

Sol 

Milreis of 1,000 reis . . 
Rouble of 100 copecks 
Peseta of 100 centimes 

Crown 

Franc 

Mahbub of 20 piasters 
Piaster 

Peso 

Bolivar 



Standard. 



Gold and silver 



Silver 

Gold and silver 

Silver 

Gold 

Gold 

Gold and silver 

Gold and silver 

Gold 

Silver 

Gold 

Gold and silver 

Gold 

Gold 

Gold and silver 

Gold and silver 

Silver 

Gold and silver 

Silver 

Gold 

Silver 

Gold and silver 

Gold 

Silver 

Gold 

Silver 

Gold and silver 

Gold 

Gold and silver 
Silver. ... .... 

Gold 

Silver 

Gold and silver 



Value 
in U.S. 
money 



96.5 



39 3 
19.3 
79.5 
54.6 



93.2 



Standard coin. 



1-20, 1-10, 1-5, Yn, and 
1 peso, ^ argentine 
and argentine. 

5, 10 and 20 francs. 
Boliviano. 



Condor, doubloon, 
and escudo. 

1-16, M, H, Yz, and 1 
doubloon. 

10 and 20 crowns. 

Peso. 

5, 10, 25, 50, and 100 
piasters. 

5, 10, and 20 francs. 

5, 10, and 20 marks. 

3^ sovereign and sov- 
ereign. 

5, 10, 20, 50, and 100 
drachmas. 

1, 2, 5, and 10 gour- 
des. 

5, 10, 20, 50, and 100 

lire. 
1,2, 5, 10, and 20 yen, 

gold, and silver yen. 

Peso or dollar, 5, 10, 
35, and 50 centavo. 

10 and 20 crowns. 
Sol. 

2, 5, and 10 milreis. 
14, j-a. ^nd 1 rouble. 
5, 10, 20, 50, and 100 

pesetas. 

10 and 20 crowns. 
5, 10, and 20 francs. 

25, .50, 100, 250, and 

500 piasters. 
Peso. 
5, 10, 20, 50, and 100 

bolivar. 



Subsidiary, sometimes called fractional coins, are those in which 
private debts generally of from five dollars to five pounds are 
payable, and which are not legal tender beyond that sum. Their 
material is usually silver, copper, brass, nickel, or bronze. Those 
of the United States are half-dollars, quarter-dollars, twenty -cent 



SILVEU AND GOLD. 339 

pieces, and dimes, all of silver, half-dimes and thi-ee cents of 
silver or nickel, cents of copper, and nominally mills, though no 
mills are coined. 

The poorer a country is, the slower its rate of production, and 
the more nearly its currency is expended only on objects essen- 
tial to vital consumption, viz., food, clothing, and shelter, the 
cheaper and baser may be, and perhaps must be, the materials 
which it uses as money. In China, India, Italy, and Egypt, 
where the wages of labor are low, silver is the standard money of 
larger commerce, and the coin in which all credit money is re- 
deemable, while bronze and brass, of lower value than copper, are 
necessary for small change, in the payments for goods at retail, 
and for petty services. As the rate of production and the volume 
of wealth increase, more of it takes the form of means of pi'o- 
duction or reproductive wealth, larger values need to be expressed, 
and the volume of metallic currency increases rapidly, but the 
ratio of increase of credit currency is still greater, so that, in such 
countries, both gold and silver become secondary to credit money. 
They remain chiefly as means of adjusting balances, and giving 
stability to the credit currency, which becomes the chief means 
of payment. 

If a country makes abundant provision for the issue of large 
bills or notes, whether of the government or of banks, its use of 
gold will be less in quantity than if it does not ; and if it provides 
an abundant issue of small bills, its use of silver will be less. 
Gold and silver are hardly, in most countries, competing cur- 
rencies, but gold is rather the currency of capital and the whole- 
sale trade, and silver of labor and the retail trade, except in so 
far as bills and notes, large or small, may supersede both gold 
and silver. England, though having the single gold standard, 
uses about $100,000,000 worth of silver, all of which is subsidiary, 
but all of which, owing to the absence of small bills, is in active 
and much-needed circulation. The silver coinage of England 
under Victoria includes a crown containing 436.35 grains (five 
shillings), a half-crown containing 218.17 grains, a florin 174.54 
gi-ains, a shilling 87.27 grains, a sixpence 43. 63, a groat 29.06 grains, 
and a threepence 21.81 grains. The standard for silver coin from 
the second year of Elizabeth to the present day has been 11 '/lo 
parts of pure silver to nine-tenths part alloy. 

135. Changes in British Coinage. — A few gold coins 
were struck by English kings previous to the Norman Conquest, 
but the regular currency was silver. A '' gold penny " was coined 



340 ECONOMIC PHILOSOPHY. 

in 1257, which was of the value of twenty pence, and is now so 
rare that it sold for £140 in June, 1864. It contained 45| grains 
of pure gold without alloy. In reign of Edward III. (1327-1377) 
there were four issues of gold coins, viz., florins, weighing 108 
grains, current for 6s., half-florins, and quarter-florins ; nobles, 
half-nobles, and quarter-nobles. The noble had ISSj^j grains 
and was current for 6s. 8d. It had y^ of alloy. This propor- 
tion was the only one in use prior to Henry VIII. In reign of 
Edward IV. the gold coins were the rose noble or rial, the half- 
noble, quarter-noble, angel, and angelet. The weight of the noble 
or rial was 108 to 120 gi^ains, and it was current for 8s. M. The 
angel, so-called from its bearing a figure of the Archangel Michael 
slaying the dragon, contained eighty grains, and was current at 
6s. 8d. The angelet was a half-angel. Some of these sold in 1864 
for from £10 to £30. Sovereigns, stamped with an image of the 
sovereign on his throne, appeared in the reign of Henry VII. 
(1485-1509), were of the weight of 240 grains, and current for £1, 
or 20s. In Henry VIII. 's reign there were at first double sover- 
eigns, sovereigns, rose nobles or rials, George nobles, angels and 
half-angels, crowns and half-crowns. Later, in years thirty-four 
and thirty-five of his reign, came the pound sovereign, in which 
the weight was reduced from 240 grains, current for £1 2s., to 200 
grains, current for £1, or 20s. At the close of his reign the pound 
sovereign contained 192 grains, and was made current for 20s. 
The crown at the latter date contained forty-eight grains, and was 
current at 5s. In the reign of Edward VI. (1546-1553) the sover- 
eign sank to 174y*'j; grains, and was still current for £1. Double 
and triple and six-angel pieces were issued. In the reign of Mary 
the sovereign was restored to 240 grains, and made current for 
£1 10s. The rial, 120 grains, passed for 15s., the angel for 10s. 
In this reign coins passed from the hammered stage and were 
milled. The sovereign returned to 174A grains, and was cur- 
rent at 20s. , the fineness being twenty-two carats fine gold and 
two carats alloy. At the union of the two i^ingdoms under James 
I. there were issued unites, double croAvns, Britain crowns, half- 
Britain crowns, and thistle crowns. The unite weighed only 
154ff grains, and was current for 20s., or £1. The" "unite" 
or gold pound of the time was also called a "laurel," and receded 
in weight during the reign of James I. to 140|f grains. Under 
Cromwell there were fifty-shilling pieces, twenty-shilling pieces, 
or "broads," containing 140|f grains, and half -broads, the 
broad being equal to the pound. Under Charles II. the term 



SILVER COINS. 341 

guinea came iuto use, tlie coinage being of a five-guinea piece, 
weight 647 18-89 grains, cui-rent for £5, a two-guinea piece, a 
guinea, and half-guinea. The guinea for a term after 1663 circu- 
lated at a value of 20s., in 1694 at 21s. Qd., from 1694 to 1696 at 
30s., from which it sank again to 21s. 6d. before 1702. The guinea 
or pound receded to 129§f grains. In the reign of George III. 
sovereigns were again issued as the equivalent of the pound — the 
weight again falling to 123y%yu grains. In the reign of Vic- 
toria this continues to be the weight of the gold "sovereign," 
which stands for the pound sterling. Since 1816 it has been the 
standard unit of coinage. 

The pound sterling, the national unit of English currency, is I'e- 
puted to have been originally a pound troy of silvei*.* But works 
on English coinage t first describe the coinage of the silver pound 
as occurring in the reign of Charles I. (1625-1649), when it con- 
sisted of 1858 grains of silver, of the standard of lljV parts fine 
silver, to ■f^j pai*t alloy. The other silver coins of this period 
were the 10s. piece of 929 grains ; the crown, 464^ grains (de- 
clined from 480 grains in reign of Edward VI.) ; the half-crown, 
232J grains ; the shilling, 92| grains (declined from 96 grains 
since Edward VI.) ; the sixpence, 46^ grains ; the groat, 31 
grains (declined from 42|^ grains since Henry VIII., and 48 grains 
since Edward IV.) ; the thi^eepence, half-groat, penny, and half- 
penny. Prior to Henry VII. the silver coinage seems to have 
been confined to groats, half groats, pennies, halfpennies, and 
farthings, though testrons (shillings), having 144 grains each, 
were coined in his reign. X 

After about 1600 the cheap gold of Mexico and Peru, pouring 
in upon England, maintained a lower value in the bullion than it 
was worth in coin, and hence was coined largely, draining Eng- 
land of silver. The relative quantities of the two metals coined 
f uniishes no criterion of their respective circulation, but only of 
their relative cheapness, as it is always the metal which is over- 
valued in coin that seeks the mint. 

COINAGE, GOLD. SILVER. 

£. s. d. £. s. d. 

Under Charles II., 177,253 19 5 3,722,180 2 8 

" James IL, 2,113,638 2 8 518,316 9 5 

* " The Silver Pound," by S. Dana Horton. p. 74. 
tllenfrey's " English Coins," p, 222. 
X Henfrey's " English Coins." 





SILVER. 




s. cl. 


£ s. 


d. 


15 6 


79,026 9 


4 


16 1 


7,014,047 16 


11 


8 4 


527,469 10 


4>^ 



342 ECONOMIC PHILOSOPHY. 

COINAGE. GOLD. 

£ 

Under WiUiam and Mary, 443,328 
" William HI., 2,975,550 

" Anne, 2,484,531 

From 1787 to 1798 silver coins became so scarce in England that 
it was sought to supply the deficiency by coining Spanish-Amer- 
ican dollars and half-dollars countermarked with the head of 
George III. They passed current at 5s, aiid later at 5s. 6d. Since 
the recoinage of 1816, crowns, half-crowns, florins {2s.), sixpences, 
threepences, and groats of silver have been issued. From 1685 to 
1694 tin halfpennies and farthings were coined. Pennies, half- 
pennies, farthings, half-farthings, and quarter-farthings have 
been coined of copper in most reigns since Charles II. In 1874 
the London mint coined fifty-four tons of copper pence and half- 
pence, and one hundred tons of bronze pence, halfpence, and far- 
things. Its largest issue of bronze coins was 134 tons in 1875. 
Silver and copper coins of small value facilitate the minute sub- 
division of the results of labor among a large number of persons, 
and at the same time make it possible to gather up small values 
from an infinite number of customers in a way to promote great 
enterprises. The great daily press depend on a copper coinage, as 
the retail trade generally depends on one of silver. So of cheap 
fares, drinks, and food. 

The pound sterling, or twenty shillings, of England has contin- 
ued for centuries to be the unit of account, though seldom any 
silver coin representing it existed or could circulate, owing to the 
fact that gold was continually the cheaper and cheapening metal. 
The sovereign, the broad, the double-angel, and the guinea have 
at various times stood for the pound sterling because the quantity 
of gold in these coins was worth less than the standard value of 
the coin, while the quantity of silver required for the silver pound 
would have been worth far more. As silver pounds, if coined, 
would have been melted, it was impracticable to coin them. It is 
usual to say that, prior to 1717, England had the silver basis, with 
gold rated according to its value in silver ; that from 1717 to 1816 
gold and silver both had free coinage and unlimited legal tender ; 
and after 1816, silver has constituted a subsidiary coinage and gold 
has been the one standard unit of coinage.* 

* Mr. S. Dana Horton (" The Silver Pound," Introduction) shows that in common 
discussion the term standard may have one or the other of nine distinct meanings, viz. 
jt may mean — 



DIVERSITY IN MONET. 343 

136. The Standard. —The influence of the volume of each 
kind of money, or means of payment, in circulation, upon the 
value of the other, forms one of the most complex topics in finance. 
An increase in the volume of each kind of money, including 
paper, tends first to cheapen itself relatively to the others. If its 
convertibility into the others be so sustained, as to prevent it from 
dropping out of currency into a mei'e commodity, it must soon 
effect a greater absolute cheapness in all kinds of money, rela- 
tively to commodities. This cheapness of money, or fall in its 
purchasing power, is indicated by a rise in the prices of commod- 
ities generally, and is known as inflation. It has usually 
attended periods of special prosperity and activity. The disputes 
among economists, as to the effect of an increase in the volume of 
money on prices, grow largely out of their differences of opmion 
as to what 'shall be called money. The bullionist, who deems 
only gold and silver money, will hold either that paper money 
does not raise prices, or that, if it does, the rise is mischievous. 
The inflationists will vary also among themselves as to the kinds 
of paper credit which have the effects of money, in increasing or 
lowering its purchasing power. Many who freely admit that 
large issues of bank notes, or government notes, may inflate prices, 
will deny that bank deposits and discounts, or interest-bearing 
government bonds, or railway bonds or other forms of exchange- 
able credit, will have the like effect. 

Thus money is a subject which begins on the solid earth, and, 
without well-defixied lines of demarcation, passes upward into the 
clouds. The degree in which it is composed of value, or of credit, 
changes by insensible gradations. Economists strive to draw a 
line where it shall stop, but cannot agree on the line. One, with 
Amasa Walker, says only coin of full weight and fineness is 



1. The fineness of money metals, or whether it has a giveu proportion of pure metal 
to cheap alloy. 

2. The fineness prescribed by law for a coin- 

3. The weight prescribed by law for a coin. 

4. The national unit of account (pound, dollar, franc, marc), regarded as a denomina 
tion, name, or title, as distinguished from the coin which may at various times be its 
body or substance. 

5. The national unit of coinage, being the coin in body and substance of which the 
unit of account is the abstracted idea. 

6. The full legal tender money of a country. 

7. The kind of such money chiefly in use. 

8. The kind of money the manufacture of which is free, and which is the par or nom- 
inal standard by which the other moneys of a country are rated. 

9. The monetary system of a country in general terms . 



344 



ECONOMIC PHILOSOPHY. 



money. Another says coin and notes issued on deposits of coin, 
after the method of the Bank of England, are money. Another 
will include all bank notes, while redemption in coin is main- 
tained on them. Another defines money to include all exchange- 
able credit, and affirms, with MacLeod, that even coined money 
circulates on credit. Another includes bank deposits and dis- 
counts, and so on. 

These differences, as to what constitutes money, are accompanied 
by divergent views as to the nature of the actual standard, or 
measure of values, against which values of property balance and 
jDrices result. The bullionist will say it is the quantity of coin in 
use. The banker will say it is the quantity of coin and redeem- 
able paper. The advocates of a credit currency will say it is the 
aggregate volume of gold and silver coin, and of exchangeable 
credit, in any one country. Finally, the internationalist will say, 
it is the general volume of all three, in all countries which ex- 
change together. The former quantities are nearly computable 
for a single country. The latter is incomputable, even for one 
country. Still more so for all. Thus money, like the ladder in 
Jacob's vision, has its feet on the earth and its summit in the 
clouds. It may be added that such is its utility in whatever form, 
that there are never wanting those who can see the angels of 
heaven descending and ascending upon it. 

137. The Ratio between the Money Metals.— England 
uses more silver money than the United States, because she makes 
no provision for the issue of small notes of from $1 to $10 in 
denomination. Germany also, though aiming to have a cur- 
rency of gold only, uses far more silver than France or the 
United States, because the condition of the German people, their 
frugality and low rate of production, render silver more indispen- 
sable to them than gold. 

The coined and paper money of thirty-eight of the world's prm- 
cipal nations (excludmg China) was compiled by the director of 
the mint in 1883, in the following chart (in which each number 
represents millions of dollars) : 





Gold. 


Silver. 


Total specie. 




Paper. 


Full tender. 


Limited 
tender. 


Total paper 
and specie. 


3,833 


3,333 


2,277 


434 


6,045 


9,875 



Gold and silver bullion maintain the same value relatively to 
other commodities, only proximately and not absolutely. Usually 



THE RATIO. 345 

for a century, and in a less perfect manner for several centuries, 
gold has been worth from fifteen and one-half to sixteen times its 
own weight in silver, and on this expected ratio the coinage of 
the two metals in Europe and America has been adjusted, the 
legal ratio being one to sixteen in America, and one to fifteen and 
one-half in Europe. Since 1878 silver bullion has declined 
relatively to gold bullion in purchasing power, until at the 
present time it requires about twenty-two times a given weight in 
silver to equal in value the same weight in gold. 

Adam Smith says that, before the discovery of the mines of 
America, an ounce of gold was worth only from ten to twelve 
ounces of silver, but by 1650 they came to bear the relative values 
of one to fourteen or fifteen. Both metals sank, in their pur- 
chasing power, relatively to labor and coramodities, but silver the 
more rapidly, owing to its moi'e rapid increase of production. 
The Western continent has ever since been the source of supply 
to the Eastern— the migration of the precious metals being al- 
ways in the opposite direction to the migration of population. 
In India silver has always been held in higher esteem, relatively 
to gold, than in Europe, as both the money and the ornaments of 
the people are of silver. At the mint of Calcutta, a century ago, 
an ounce of fine gold was held worth only fifteen ounces of silver, 
and in the markets of Bengal and Madras somewhat less. In 
China the proportion was then and is now only one to ten, and 
in Japan, at least until recently, one to eight. The population of 
China and India are so large, and their customs so fixed, that 
they maintain a higher relative value on silver, as compared with 
gold, than is maintained by Western nations. 

Silver and gold are produced, in America, in about the relative 
quantities of twenty-two in weight of tlie former, to one of the 
latter, but of these twenty-two parts about seven were, for a cen- 
tury, drawn off annually to India, leaving only fifteen parts of 
silver to one of gold to supply Europe and America. The theory 
was propounded more than a century ago by Mr. Meggins, and 
combated by Adam Smith,* that the relative values of gold and 
silver depended on the relative quantities produced for circula- 
tion in Europe. Meggins held, therefore, that if the drain of silver 
to India should stop, the ratio between the two metals would fall 
to one of gold to twenty-two of silver. Smith thought it would 
not. But in 1873-6 the dz'ain to India stopped, or nearly' so, and. 



" Wealth of Natio is," Book i. p. 97. McC'iillojh's Ed 



3^6 ECONOMIC PHILOSOPHY. 

whether from this or other causes, the relative value of silver fell 
as Meggins predicted. 

Ml European nations, and the United States, have judged fit, 
in consequence of this fall, to cease to coin silver, at the will of 
the holder, in the proportions of one to fifteen and one-half, or 
sixteen, as they had previously done. 

138. Exchangeable Credit as Quasi Money. — Credit 
consists in giving faith or belief to a promise or to a statement of 
a fact. If the promise or statement relates to a value, and is of 
a kind which many persons will have faith in, one of these per- 
sons will take it from another, as equivalent to the fact which it 
states or the value it promises. Hence, about as easily as goods 
became exchangeable, credit becomes exchangeable. Exchange- 
able credit has so many effects analogous to money that certain 
economists treat it as credit money. It is not necessary to the 
creation of credit money, so-called, that its issuers shall suppose 
or intend it to be money. It is only necessary that it shall act 
as a convenient substitute, and perform the functions, of money. 
In finance as in the enlistment of troops, the substitute, being ac- 
cepted for service, fights as principal, and that for which it acts 
as substitute goes about other business, or is retired. 

Bills of exchange, and promissory notes of private persons and 
firms, bank notes issued to circulate as money, bank deposits 
and checks, government notes, commercial accounts, store orders, 
government and corporate debts, all help to make up this indefi- 
nite volume of exchangeable credit. It includes all credits which 
are capable of easy subdivision, like bank accounts, or ready 
exchangeability, like negotiable notes, so as to be used with more 
or less frequency and regularity as means of payment of debts, 
and purchase of goods and services. 

In so far as commodities are exchanged, through the use of 
either of these media, without any payment for them in coin, they 
become substitutes for money, doing its work upon very differ- 
ent terms as to cost. 

139. Bills of Exchange and Notes. — Bills of exchange are 
used as substitutes for gold and silver in international trade. A 
bill of exchange is a draft or order for the payment of a certain 
sum of money, drawn by the vendor or consignor of merchan- 
dise, either sold or sent to the consignee to be sold, whereby the 
consigner of the goods requests the consignee to pay their price 
to a person named, or to some one to whom he shall order it paid. 
As to the bill, the consignor becomes the di-awer. The person, on 



BILLS OF EXCHANGE. 347 

whom it is drawn, becomes the drawee. The person who is to 
receive the payment is the payee, and when he transfers the bill 
he becomes endorser. If but one such bill existed, it would not 
supersede coin, but would have to be paid in coin by the drawee. 
But when many such bills are drawn, they come to represent, not 
only the several prices of all the merchandise shipped from 
place A to place. B, but also all the return merchandise shipped 
from B to A. The bills drawn by Rio Janeiro merchants on 
London merchants for the price of coffee, hides, caoutchouc, 
diamonds, silver, wool, and ti'opical fruits, shipped from Rio to 
Loudon, ai'e found to nearly equal in amount the bills drawn by 
London or other foreign merchants somewhere, on those in Rio 
for cloth, hardware, furniture, machinery, etc., shipped by them 
to Rio. If both classes of bills could be got together in one place, 
with the persons from whom they are due, and to whom they are 
due, it would be found that the Rio exporters had shipped to 
London just coffee, hides, caoutchouc, diamonds, silver, wool, 
and fruits enough to pay for the cloth, hardware, furniture, etc., 
shipped by the London merchants to Rio.* London and Rio are 
even within a few dollars, not more than two or three per cent, 
of the whole. Obviously, therefore, no gold need be paid or 
shipped on any of these bills. It is only necessary for the Brazil- 
ian importer, who owes money in London, to pay it to the Bra- 
zilian exporter, to whom money is owed in London, and for the 
London merchants to do the same, provided what each pays at 
home is credited on what he owes abroad. This is done by the 
importer in Rio buying the draft made by the exporter in Rio, 
and the importer in London buying the draft made by the 
exporter in London, and using it in payment of his own debt. 
The price of exchange, or the rate at which drafts can be bought, 
is said to be in favor of Rio when drafts on London are so plenty 
in Rio that they can be bought there for a small discount from 
their face value. It is against Rio when drafts in Rio, on Lon- 
don, sell at a i^remium. The amount of this premium or discount 
is supposed to be adequate to cover the risk of being obliged to 
incur the cost of transmitting the specie, including interest, in- 
surance, and profits. 

Thus no payment at all, in money, need be made for these pur- 
chases, on either side, so far as their values offset each other, and 

* Where this is not in fact trne as to the shipments between any two places, it is 
made true in effect by taking in such other places as have made shipments ftnci drawu 
drafts which in the aggregate will balance. 



34» ECONOMIC PHILOSOPHY. 

money as a medium of exchange is dispensed with, but the bills 
on both sides become, for the time being, substitutes for the 
money, and hence a form of credit money. 

Promissory notes of private persons and firms become sub- 
stitutes for money, and a species of credit money, when given 
in payment for merchandise in such numbers as to be offset 
against each other, and so paid by cancellation. When the con- 
dition of private credit is such that notes of ordinarily solvent 
customers, payable two or three months ahead, can be taken by 
their holder to a bank or broker, and cash or credit obtained for 
them by their holder, wherewith to pay his old debts, or buy 
new goods, and when, over long periods of time, private credit 
remains so stable and secure that, on the maturing of each set of 
notes, they can be taken up or paid with the proceeds of the sale 
of the goods for which they were given, and when these proceeds 
are often themselves the notes of persons to whom the goods were 
sold, it is obvious that many goods will pass from producers to 
consumers on a currency or means of payment which consists 
wholly of private promises to pay. And when all the pi-omises 
to pay given by merchants in Syracuse for cloth and iron are 
taken to New York, and there compared with like promises given 
by New York merchants for salt, purchased in Syracuse, it is 
obvious that the system of offsetting these notes against each 
other will pay them, as in the case of bills of exchange. To the 
extent this is done all the merchandise, for which they were given, 
is in fact exchanged without any interposition of money. And, 
to the extent this is done, the notes themselves have been a sub- 
stitute for money, and therefore a form of credit-money. 

140. Money of Account. — Commercial accounts of all kinds 
may assume a payment in coin as to be made, which in fact is 
never made in coin. Hence the term money of account comes to 
mean ideal money — not coined money. A shoemaker and farmer 
reside near each other. The shoemaker can do $1,000 worth of 
work each year in making shoes, and wants $500 w^orth of crops 
from the farm, but the farmer can only take $100 worth of shoes. 
He opens an account with the shoemaker, and in the course of 
the year sells him $500 worth of food and buys fi'om him $100 
worth of shoes, leaving the shoemaker owing him $400. But the 
shoemaker has also made and sold $100 worth of shoes each for 
the butcher, blacksmith, wagon-Avright, and carpenter, against 
each of whom he has accounts for shoes furnished, $100 each, be- 
ing just enough to pay the farmer. If now the butchei', black- 



DEPOSITS AND CHECKS. "849 

smith, wagon-wriglit, and carpenter have also done work for the 
farmer, whereby he owes them $100 each, evidently the shoe- 
maker need only cancel his accounts against them and let them 
cancel their accounts against the farmer, to place the farmer 
where he can cancel without loss his accounts against the 
shoemaker. Thus $1,200 worth of services have been ex- 
changed nominally for money, but really for the abstract idea or 
conception of money. Each service when rendered was charged 
for at a certain sum in money, but really no money was used. 
Hence, the book accounts were a substitute for money, had the 
effect of money, and are therefore a form of credit-money. From 
these the term " money of account " has been borrowed, to mean, 
at first, that kind of money which consists of accounts which off- 
set each other, and enable payments to be made without the act- 
ual use of money. From this the term " money of account " rises 
to mean money considered as an intellectual and financial concep- 
tion merely, as one might say " money in your mind's eye," or 
money in thought, as distinguished from money physically pre- 
sent. "Money of account" is thus the pound, the dollar, the 
marc, the fi'anc, when considered not as a coin, but as a denomi- 
nation, name, or title — a mere idea of which the coin is the body 
or substance. * All forms of credit tend thus to idealize money, and 
enable exchanges of commodities to be made, by the use only of 
instruments which express money of account, without the inter- 
vention of coined money, t 

141. Bank Deposits and Checks. — These, also, become a 
form of credit-money. The system of bank checks, on deposits, is a 
system devised by the minor banks of England to thwart an act 
of Parliament which was designed to limit to the Bank of En- 
gland, and a few others, the privilege of issuing their own notes 
as a means of discounting, or "cashing " the notes of their cus- 
tomers. The minor banks said to their customers : ' ' We can not, 
owing to this act of Parliament, issue to you our notes, but 
we can give you a credit on the notes you may leave with us, as 
if a sum named had been deposited by you in our bank, and 
on this you can draw at pleasure, by your check. In this way 
the act of Pai'liament was wholly thwarted, and a new form of 
credit-money was created, more effectually than if every bank 
had been permitted to discount its customers' notes with its own 
bills. To such an exteiit have the deposits and checks become a 
substitute for money, and a means of payment and of credit, that 

* " The Silver Poimd," by G. Dana Horton, p. sxi. t Vide Note to Sec. 157 />w^ 



350 EGONOMIG PEIL080PEY. 

in the payments made through checks, for goods sold, in the city 
of New York, amounting to from $80,000,000 to $100,000,000 daily, 
only about three per cent, are usually paid in coin or bank-notes. 

142. Bank Notes. — Bank notes are the form of exchangeable 
credit which it is most easy and natural to regard as moneyi A 
bank is a shop for the sale of money and credit, coined money, 
and credit money, in exchange for securities which ensure to it 
the payment of money after an interval of time. All the obliga- 
tions of a bank to its customers are, at all times, payable on demand. 
Most of the securities and assets will be obligations payable at a 
future period.. It is of the essence of all banks that they are in- 
solvent if all the holders of their obligations call for them at once, 
since they have not the right or power to call upon all the persons 
indebted to them to pay at once. Banks are founded upon aggre- 
gated credit, deal in credit, rest on credit, and require a certain 
condition and stability of general credit for their continuance. 
They are storehouses for the aggregation and storage, purchase and 
sale, of credit and cash, in the same manner as merchants' ware- 
houses are storehouses for the aggregation and sale of goods, and 
as elevators and boards of trade, together, constitute a market for 
the collection and sale of grain and agricultural produce. In 
Russia, grain is dealt with in a manner so nearly analogous to 
banking, that grain markets are called grain banks. 

Credit must be aggregated, in founding a bank, before banking 
business can be done, because, if a bank loaned only its own capi- 
tal, it would no sooner get all its capital loaned than it would be 
out of business. But, by presenting to the business community 
an imposing aggregation of credit, and compelling confidence, it 
attracts the deposits of its customers to an amount from two to 
six times greater than its capital, and thereupon its profits chiefly 
ensue from lending the money of its depositors. 

The credit aggregated, in the degree necessary to give the bank 
the confidence of the public and of depositors, in various ways, 
in banks of large business and long standing, is due chiefly to 
many years of safe, prompt, aiid honorable dealing. In the first 
instance, however, there is usually a stacking together of public 
securities, or credits of some kind, such as government or state 
bonds, national debts, gold or the like, in whose stability the 
])ublic have confidence, and the bank virtually says to the public : 
" Look at these and trust us on their account." * 

* When the government of Russia desired, in 1834, after " scaling " the government 
paper money, whicli had circulated at only one-fourth its par or nominal value, to 



A NATIONAL BANK. 351 

The banks of Venice (founded in 1711), Genoa, and England 
originated in loans made to governments, on the faith of which 
government x'e venues wei^e indirectly or directly pledged, and the 
banks, as chief creditors of the government, became its fiscal 
agents. The Bank of France, Imperial Bank of Germany, that 
of Austria, of the Netherlands, of Russia, are national institutions 
of great magnitude, modelled in a more or less imitative spirit 
after the Bank of England. One of the burning questions 
pending in the politics of the United States from 1790 to 1833 was 
whether the United States should have a national " Bank of the 
United States, " which should perform. lilce functions toward the 
government and banks of the United States as those performed by 
the Bank of England. Alexander Hamilton was the principal 
advocate of the policy, Andrew Jackson its final opponent. The 
first national bank was founded nearly simultaneously with our 
government, under Mr. Hamilton's influence, and the second 
national bank expired under the veto of the bill to renew its 
charter, which veto constituted one of the salient features of 
Jackson's administration. 

Banks of issue and redemption issue paper money, and purport 



enter into a joint arrangement witli the banks of Russia, whereby the banks should, 
as agents of the government, redeem at par the new government notes, to be issued 
in exchange for tlie old at the rate of one of the new for four of the old, the Czar 
collected in the fortress of St. Petersburg 130,000,000 roubles in gold as this basis of 
redemption, and invited the bankers and merchants of the empire to come in and 
look at his gold, as a means of inspiring confidence in the ability of the government 
to redeem the new currency at par. 

Again, under the existing national banliing system, in founding a national bank, 
$100,000 in government bonds were purchased by the founders and deposited in the 
Treasury at Washington, as security for the redemption of every $90,000 of bills issued 
by the bank, all of which were furnished them by the government, engraved at the 
government office and delivered to them in exchange for the bonds. This secures 
the redemption of the bills. At present the government of the United States leaves 
the business of banking open to free competition, so far as banking consists in 
receiving deposits and discounting notes. So far as it consists in issuing notes, the 
redemption of the notes is secured by pledge of government bonds. No system has 
yet been devised or conceived whereby depositors can escape the risk involved in the 
custody and lending of their money by the baniJS on losses by defalcations of its 
officers. The capital of the bank, however, when called in from its function of securing 
the redemption of the bills of the bank, which is ii.s primary liability, is then liable to 
depositors to the extent it will go, for any inadequacy in the assets on which the 
bank has made its loans to pay its depositors. The quarterly statements which our 
national banking law requires the bank to publish of their assets and liabilities is sup- 
l)osed to throw some light to guide depositors as to the degree of credit in whicli the 
l)ank should be held, and the government system of inspection is supposed to be imper- 
fectly and in some small degree adapted to detect substantial untruths in these quar- 
terly statements. It has, however, seldom been equal to the task. 



353 ECONOMIC PHILOSOPHY. 

to redeem it in coin. Banks of deposit and discount are those 
which, make loans on time bills, and derive their incomes chiefly 
from lending deposits. As to their form and organization, they 
may be either (1) quasi government banks, like the Bank of En- 
gland, Bank of France, Imperial Bank of Germany, etc., or(2) cor- 
porate and joint-stock banks, founded wholly by private capital ; 
and the latter are, in the United States, still further divided into 
(1) national and (2) private banks, the former meaning those 
which issue bills secured by deposit of government bonds, and 
the latter those which at present issue no bills, being restrained 
from issuing bills by a fedei'al law, taxing them more for issuing 
bills than they could afford to pay. 

What have been known in the United States as State banks 
were corporate banks, based chiefly or wholly on private capital, 
but authorized by the laws of the several States. In a few cases 
as in that of the State bank of Iowa, and of Indiana, they were 
institutions in which the State held stock and had a part control. 
In most cases, however, they were formed under a general law 
which authorized any three, five, or seven, or more jjersons to go 
into the business by putting up securities to the amount of the 
alleged capital, which might consist of bonds of the State, or of 
some city or town, or private mortgages on real estate. So pre- 
carious were many of these securities that the currency or notes 
issued upon them had a very fluctuating value. The banks 
acquired an unsavory reputation, being called "wild-cat banks," 
and the like, until at the outbreak of the I'ebellion in 1861 most 
of them collapsed and the circulating notes of the remainder wei'e 
retired. The national banking system Avas devised to take their 
place. Among these State banks, however, those of Massachusetts, 
Rhode Island, New York, Indiana, and Iowa bore a good repu- 
tation and in great part redeemed their paper. So unpopular had 
the principle of banking become in many of the iiewer States that 
in one at least, Michigan, the constitution prohibited the creation 
of a bank. 

143. Government Notes and Debts. — Government debts 
are seldom recognized as an issue of credit-money, and some mis- 
takes in legislation have been due to this oversight. In the war 
of the American Revolution, 1776 to 1783, the paper money known 
as "Continental money " was an issue of government debt in- 
tended to circulate as money, which was repudiated and became 
worthless ultimately, for lack of any provision for redeeming it 
in coin, for funding it into interest-pay^ing bonds, or for making 



HANDLING THE WAR DEBT. 353 

any other valuable financial use of it. A government debt must 
be made a source of income to its possessor or it will lose all value. 
Hence, to issue such a debt without' provision either for redeem- 
ing it, paying interest on it, or funding it into interest-paying 
debt, is to repudiate it in advance. 

The Confederate debt of 1861-4 met the same fate as the Con- 
tinental money, for the same reasons. The last official sale of 
Confederate money was made at tlie rate of $1 of coin for $1,200 
of the notes. The government avoided repudiation by what was 
then deemed, and felt to be, the most drastic system of taxation 
tlie people could bear. The duties on imports were raised to 
rates which could only have been enacted after the majority of 
the representatives of the free-trade idea in Congress had with- 
drawn, leaving the protectionists in the ascendency. Fifteen 
years after the war was over, the free-trade theorists and oppo- 
nents of "inflation," including Prof. Adams, in his work on 
"Debts," Prof. Laughlin in his "Elements," and others, have raised 
tlie cry that the timidity of the government caused the debt, as it 
should have raised the entire expense of the war by taxation as 
fast as it was needed. In fact, it was only by getting anti-infla- 
tionists and free-traders of these views out of Congress, or into a 
helpless minority, that the potency of the revenue laws could be 
increased in the degree that they actually were. The ' ' boom in 
prices," and the confidence in profits, caused by the rapid inflation 
through government money, set on foot an energy of pro- 
duction, by means of which heavy taxes were freely paid. The 
feeling of capacity to pay heavy taxes arose only as the people 
found that the stagnation in business, which had oppressed the 
country for the seven years prior to the war, had given place to 
an era of large profits and intense prosperity. 

The duties on imports were pledged sacredly to the payment of 
interest on the bonds. Holders of notes bearing no interest were, 
until near the close of the war, invited to exchange them for the 
bonds. 

The bonds, during the war, fell with defeat, and rose with vic- 
tory. As the notes 'ke\}t pace with them, and were the nominal 
standard, in which even gold coin was quoted, the fall in both bonds 
and notes was indexed by what was called the premium on gold. 

With the final success of the Union arms, the bonds I'ose to 75 
per cent. , and at the end of fifteen years passed to a premium. 
Tlie bonds at 6 and 7 per cent, were then exchanged for those 
bearing a lower rate of interest, until a 3 per cent, bond could be 



354 ECONOMIC PHILOSOPHY. 

negotiated at par. The greenbacks remained below par, as was 
indicated by gold being quoted at a premium, until 1879-80, when 
specie j)ayments were resumed. 

No portion of the national debt, except the greenbacks, was 
regarded as ci'edit-money within the United States. In our ex- 
changes with Europe, however, the national interest-bearing 
bonds performed a most impoi'tant function, in which, by virtue 
of their easily transferable credit, they came to resemble money. 
At the close of the war, about $2,700,000,000 of them had been 
issued, and of these all, but a few scores of millions, were held in 
the United States. They formed, however, an excellent security, 
more acceptable in Europe than private or corporate bonds, 
because better known and better secured as to their interest by 
our coin revenue. The people holding them could make more 
than their rate of interest in other investments, as indiistries of 
all kinds were intensely active to the verge of " kiting," which 
is the phrase when profits are rapidly and easily made on many 
things. The bonds were therefore exported at the rate of about 
$200,000,000 per year, until 1873, when it was computed at least 
$1,900,000,000 had been sent abroad. At this period the supply of 
bonds available for export was exhausted, and, hence, the period 
of inflated prices came to a sharp conclusion, known in finance 
as the panic of 1873. From 1873 to 1879-80, we were engaged in 
buying back these bonds or calling them in, and paying them 
off. The process pleased the people. They resisted or ignored 
the argument that the principal of the debt would earn more in 
the hands of the taxpayers than in those of the creditors. It has 
continued ever since, and the debt is now less than one-half its 
amount in 1865. The United States, at least, won the fame of 
being the only nation in the world Avhich pays off the principal 
of its debts. The easy exportability of the bonds enabled the 
country, from 1865 to 1873, to consume more than it could pay 
for in products. This postponed for nine years the sense of 
exhaustion and impoverishment which it was the natural effect 
of the war to produce. In these respects the debt acted, inter- 
nationally, as a substitute for an export of gold, and as a form of 
paper money and inflation, sustaining prices and prosperity, both 
in Europe and America. Since 1873, on the other hand, the 
rapid return and extinguishment of the debt, at the rate of nearly 
$200,000,000 a year, has operated in Europe and America as a 
contraction or withdrawal of currency, the effect of which has 
been everywhere visible in a declining scale of prices and a pi'e- 



OOST OF" COIN AND CREDIT'. S55 

carious condition of ijrofits, with gi'eat shrinkage in values, 
timidity in enterprise, and discontent on the part of labor. 

144. The Volume of Credit. — This survey of the nature of 
credit shows that it consists of the aggregated faith of millions 
of individuals, in the future of the declared intentions of millions 
of other individuals, as to whether such intentions will be per- 
formed or not. The law can neither regulate the formation of 
these intentions, IJie faith of others therein, nor their perform- 
ance. Hence, it can only regulate the volume of certain forms 
of credit, not of all forms. If it forbid bank notes, government 
notes, small bills, it will increase the degree in which the note 
which A gives to B on sale of a horse, or for a day's work, will 
circulate, perhaps with the endorsements of C, D, E, F, and G. 
If it enact that only the Bank of England shall issue its own 
notes for the notes of its customers, the other banks will check- 
mate the law by the system of deposits and checks. If it make 
paper money scarce, merchants will be obliged to give long 
credits, which are another form of credit-money neither so secure 
nor satisfactory as paper money. Hence, in legislation con- 
cerning the volume of paper or credit, the legislator is liable to be 
foiled by the elusiveness, subtlety, and variability of the principle 
of human faith. 

145. Relative Cost and Economy of Coin and Credit — 
Fiat Money. — However simple may be the object, or commod- 
ity, of which we attempt to compute the ultimate and true cost, 
the calculation carries us out into an infinitude of values which 
are iiicomputable, and back to the very origin of things. To com- 
pute the ultimate and true cost of the inkstand from which I take 
my ink, I must assess it with its share of the losses that have been 
made in the manufacture of glass, and this, at the outset, is im- 
possible. How, then, shall we attempt to solve a problem so 
much more difficult as the relative economy of coin and credit 
currency ? Each is as essential to the other as sunshine is to rain, 
and air to sunshine. Economists, with the exception of Amasa 
Walker, are nearly united in the belief that credit money is more 
economical than coin, by nearly the whole cost of the coin. 

The employment of gold and silver, exclusively, as money, is a 
matter no more within our choice than it would be to employ 
artificial irrigation, exclusively, as a means of moistening the 
fields. Credit attaches to those who show that they possess the 
gold and silver, as naturally as the rain descends. But if a cur- 
rency' of coin only, without credit, were possible, it Avould sub- 



356 ECONOMIC PHILOSOPHY. 

ject the nation, or aggregate society, using it, to an annual 
charge nearly or quite equal to the annual interest on the whole 
volume of currency so used, relatively to the comparative cost of 
credit money in any of its forms. But even this would be a vast 
saving on barter. For gold and silver have an intrinsic value 
equal, in every instance, to the commodities they exchange. This 
intrinsic value keeps pai*allel with the cost in labor of producing, 
though, as we have seen, it is the value they have that causes the 
requisite labor to be expended in their production, and not the 
labor so expended which causes their value. Having this in- 
trinsic value, the ability of a possessor of cloth to effect an ex- 
change thereof with the possessor of iron, through the services of 
an intermediate possessor of gold, involves, the previous expendi- 
ture of as nmch labor, to produce the gold necessary to the ex- 
change, as to produce the cloth or iron. But, by means of either 
of the forms of credit money we have named, the same exchange 
is effected through a medium which has no intrinsic value, and 
whose existence, ordinarily, does not involve an investment of an 
amount of actual capital equal to its whole volume. Hence Adam 
Smith says : " The substitution of paper, in the room of gold and 
silver money, replaces a very expensive instrument of commerce 
with one much less costly, and sometimes equally convenient. 
Circulation comes to be carried on by a new wheel, which it costs 
less both to erect and to maintain than the old one. " 

Yet we must not fall into the common error of supposing that 
the actual cost of credit money is merely the cost of printing or 
engraving the instrument of credit ? 

It is the cost of maintaining the credit, of which the printed or 
engraved paper is merely the instrument of transfer. In the case 
of the greenback note, the form of credit money most familiar to 
Americans, the cost of maintaining the credit may have been 
the whole cost of maintaining the Government against the Re- 
bellion, say $9,000,000,000, and the lives of one million men. On 
the other hand, some may assert that had the Southern Rebellion 
not been subdued, the Northern States would still have had 
wealth and honor enough to have paid the debt incurred, and 
redeemed the greenbacks issued in the effort. But this no man 
knows. It is certain, howevei", that the money cost of maintain- 
ing the credit represented by the greenback, in the mode in which 
it was actually maintained, Avas far greater than the volume of 
both the greenbacks and the national bonds, since to these must 
be added the swollen volume of annual taxation, from 1861 to 



COST OF CREDIT MONEY. 357 

date of payment. Such complex facts are not reducible to accu- 
rate computation, but it is clear that the greenback note cannot 
be instanced as a form of credit money that cost little, or that 
cost only the cost of engTaving the paper on which it was written. 

The Bank of England note is just as far from being cheap, 
when we estimate the whole cost of maintaining the Imperial 
Government, whose national debt constitutes the basis on which 
the first £17,000,000 of Bank of England notes are issued. For 
every note issued by the bank, over this sum, there must be a sov- 
ereign in gold deposited, to remain in the vaults of the bank until 
the note for which it is issued returns for redemption. 

An accurate computation of the exact cost of maintaining the 
credit of the various forms of credit currency is a very difficult 
one to make. The losses incurred on those forms of credit cur- 
rency which have failed of ultimate redemption, such as the Con- 
tinental money of the American Revolution — both that issued by 
Congress, and the similar issue by the several colonies — the losses 
by bank failures to redeem, which were common in the United 
States prior to 1860, the losses by the failure of the French assign- 
ats,*and of Law's credit-money schemes,! and the more I'ecent 
losses by the collapse of the Confederate debt and money, all con- 
stitute part of the general tax imposed by credit moiaey on the 
world. The annual cost of paying interest on the credits, or secu- 
rities, on which a system of redeemable credit money is usually 
based, cannot, of course, be wholly charged to that credit system. 
England would still have had a debt if no Bank of England notes 
had been issued. America would still have incurred a vast ex- 
penditure if no greenback note had been issued, perhaps a greater 
one than was actually incurred, Still the forms of credit that 
actually exist are involved in origins so expensive that they re- 
mind us of Lamb's ingenious story of the discovery of the excel- 
lence of roast pig by the Chinese, in burning down a barn in which 
a pig was accidentally roasted. It is difficult, in such a case, to sep- 
arate the cost of burning down the barn from the cost of roasting 
the pig. So, gi'eat aggregations of credit money have usually been 
connected, directly or indirectly, with the struggles of govern- 
ment for self-preservation. It may seem severe, or even absurd, 
to say that great credits cannot be built up without great sacri- 
fices, antl it, at least, amuses us to suggest that this is as unneces- 
sary as it is to burn down a barn in order to roast a pig. In fact, 
however, thus far all efforts to establish a sound and redeemable 
credit money, apart from the concurrence of national struggles 

* Vide p. 369. t Firfep. 369. 



358 • ECONOMIC PHILOSOPHY. 

and great debts, heavy taxation and stringent popular burdens, 
have only resulted in a bogus form of credit money, which was a 
discredit to all parties. Experience leads us, therefore, to doubt 
whether this particular kind of pig can be roasted without burn- 
ing down a barn. But if the cost of maintaining a credit cur- 
rency is not accurately computable, how can it be known to be 
absolutely economical ? 

It is not so clearly known to be economic, by computation, as 
felt to be economic, by experience and use. In jjeriods when the 
efforts to maintain a credit currency have failed, and involved 
a great loss, the system has been severely denounced. In periods 
when the basis for its maintenance has existed, its great popular- 
ity has caused visionary schemes to be propounded for maintain- 
ing it without any basis whatever. Proposals to establish " labor 
money," and "fiat money," on the theory that credit money is 
merely an implement of exchange, which requires only common 
consent to manufacture and use it, ovei'look the nature of credit 
itself as being, not an independent and original fact, but only, as 
it were, the shadow or effect of an antecedent fact, viz. : achieve- 
ment. Credit can only be made to follow where achievement, 
power, victory, success of some kind, has gone before. Some- 
thing creditable must be done before ci^edit can exist. It cannot 
be conferred of man's voluntary will. Hence the notion, pro- 
pounded by visionaries, that men can agree together, to give every 
man who will work an hour a certificate that he has done an 
hour's work, which cei'tificate, on presentation to any person 
having a meal of victuals to sell, will cause hina to sell the 
meal, is merely one of the amusements of idle minds. It has no 
place in economic science, and will never be actual in human ex- 
perience. 

The extremists called bullionists contend that no money but 
that which has intrinsic value should circulate. The opposite ex- 
tremists called " fiatists " propose to adopt a money, by consent, 
behind which there is no previous basis of achievement, power 
or capital capable of commanding confidence or consent. Between 
these two the average common-sense world must walk, continu- 
ing to accept, as money, that which the circumstances of their 
envii'onmeiit and education enable them to believe will exchange 
for money when they want it. 

146. Variations in the Volume of Money. — Mr. Hume 
says: 

"In every kingdom into which money begins to flow in greater 



MONET FREES MEN. 359 

abundance than formerly, every thing takes a new face ; labor 
and industry gain life ; the merchant becomes more enterprising, 
the manufacturer more diligent and skillful ; and even the farmer 
follows the plow with more alacrity and attention." 

It is claimed that a signal service was rendered by the Mace- 
donian Empire to mankind in seizing the collected treasure 
stores of uncoined gold and silver which, according to the 
barbarous customs of an earlier epoch, the mouarchs of the East- 
ern world had massed at Gaza, Persepolis, and like points, coining 
it into money, and issuing it to the world in payment for labor. 
All payments become, in the last analysis, payments for labor. It 
is asserted that more gold and silver coin were in the hands of 
men, in the third and fourth century before Christ, than all Eu- 
rope possessed at the beginning of the eighteenth century after 
Christ. The civilization and the emancipation of man under the 
Roman Empire were largely due to an increase in the volume of 
money. Certainly the tendencies toward the abolition of slavery, 
and the equalization of races and conditions, which marked the 
culmination of the Empii'e, were but the legal expressions of an 
industrial equality, wherein money had superseded the lash, as the 
inducement to labor. It is doubtful if, without money, it is pos- 
sible to organize labor on any large scale, or bring about the 
association of men, except by force and in slavery. Money, by 
affording the medium in which wages can be paid, and services 
and commodities obtained, by an easier mode than fighting, be- 
comes the first substitute for force, and hence the most efficient 
cause of emancipation. On the other hand, "the fall of the 
Roman Empire," says Sir Archibald Alison, " so long ascribed in 
ignorance to slavery, heathenism, and moral corruption, was in 
reality brought about by a decline in the gold and silver mines of 
Spain and Greece, from which the precious metals for the circu- 
lation of the world were drawn, at the very tune when the vic- 
tories of the legions and the wisdom of the Antonines had given 
peace and security, and with it increase in numbers and riches, to 
the Roman Empire." Commenting on this remarkable passage. 
Gen. F. A. Walker (in "Money, Trade, and Industry," p. 114) 
says : ' ' Doubtless this claim is far too large. Causes distinctly 
political and social had to do with the downfall of that mighty 
fabric of military enterprise, legislative wisdom, and administi*a- 
tive skill ; but it seems to me that there can not be an intelligent 
doubt that the steady rise in the value of money, due to its in- 
creasing scarcity, contributed greatly to the impoverishment of 



360 ECONOMIC PHILOSOPHY. 

the people, the decay of commercial enterprise and the abandon- 
ment of agricultural lands, which sapped the foundations of the 
Roman Empire." 

Equally evident is the connection between the modern revival 
of liberty and learning in Europe, since the fifteenth century, and 
the return of gold and silver into abundant circulation, through 
the draining of the Mexican and Peruvian treasures by Cortez 
and Pizarro and their followers, and the subsequent active work- 
ing of the American mines. Even the recent additions to the 
supply of the jjrecious metals, by California, Australia, Nevada, 
and Colorado, have imparted a wonderful impetus to all indus- 
trial movements and changes in social condition. This expansion 
in the volume of money increases the rapidity of industrial pro- 
duction. By means of its apparent effect in raising the prices, 
ultimately, of all commodities, even including land, but imme- 
diately of the more exchangeable and exportable ones in a higher 
degree than others, it thus appeals to the sense of profit in all 
men and causes them to ti-ade with more rapidity. In order to 
trade they produce, for purposes of trade, and in order to produce, 
they employ, and in order to employ they raise wages, thus stimu- 
lating all to a larger production of commodities, and furnishing 
all with the means to maintain a larger consumption of com- 
modities. The rise in prices of commodities, which results from 
an increase in the volume of money, is due to a decline in the 
purchasing power of the money itself, and not to any actual in- 
crease in the value of commodities. 

In theory it must be admitted that the rise in prices felt by the 
speculative public in such periods, is at fij^st an economic illusion 
rather than an increase of real values, but the illusion is so fruit- 
ful in calling into employment all idle time, idle money, and idle 
capital, by the appearance of being able to make money in every 
way and out of every thing, that a far larger amount of work is 
actually done, and more commodities are made, and to absorb 
these all men rise to a higher standard of living. Illusions may, 
therefore, be more fruitful of prosperity than facts, since the in- 
creased volume of mutual service they cause to be rendered by the 
members of society to each other is not an illusion, but is a part of 
the fact called Wealth, which is the subject of our study. It would 
not matter if every belief under which an increase of service, and 
an increased production of commodities, should occur among man- 
kind, were an illusion. The growth of wealth caused thereby 
would be none the less substantial and solid. 



CHEAP AND DEAB MO]SEY. 361 

It must be confessed also that, simultaneously with this expan- 
sion of prices and production by the cheapening of money, there 
are tendencies to charge immorality on those who are flooding 
the country in question with the cheap^money, and on those who 
are availing themselves of the cheap money to pay off their debts 
or to speculate in commodities. Yet the country that allows, or 
causes its people to redeem, at par, with their commodities, this 
cheap currency, is eninched in a threefold way — (1) it increases 
its own volume of currency, pinces, and production ; (2) it stimu- 
lates its exports ; (3) it finds the currency after all as good as that 
possessed by any other country. Nor does it matter whether the 
country is taking in a flood of new gold and silver, as Portugal, 
Spain, and ultimately all Europe wei^e in the sixteenth century, 
or a flood of new paper, as England was during her wars with 
Napoleon, and the United States during her struggle with the re- 
bellion. Hence it has often resulted that the most direct way to 
have good times was to have what the banJ^ers would call bad 
money ; as the money gets better (dearer and scarcer) the times 
get worse. 

147. The Single and Double Standard. — A country is 
said to have the single standard when it makes money, coined of 
one metal only, an exclusive legal tender in payment of all debts, 
public and private, and receivable for all taxes, and provides for 
its fi'ee coinage at its mints. England is a single standard coun- 
try on the gold basis, because since 1816 its mints have coined no 
silver coins which are by statute unlimited legal tender, and it 
gives free coinage to gold, however abundantly it may be pro- 
duced. By free coinage is meant that the holder of the quantity 
of bullion, required by law to be in a standard coin, may tender it 
to the mint, together with the cost of coinage, called seignorage, 
and will receive the coin in return. England, the United States, 
Germany, and Fx'ance give free coinage to gold only. 

In England, from 1256 to 1663, the statutes made certain coins 
of gold and others of silver a legal tender in payment of debts, or, 
as it was called, the " legal measure " of property. The quantity 
of silver circulating greatly exceeded the gold until about 1710. 
In 1663 silver Avas made the exclusive standai'd or legal measure, 
and so continued until 1717, when gold again divided the mone- 
taiy throne with silver, the standard continuing bimetallic until 
1816. 

In 1816, by the statute ascribed to Lord Liverpool, gold was for 
the first time accepted as the material of which the unit of coinage 



362 ECONOMIC PHILOSOPHY. 

"was made, and silver coins ceased to be legal tender in sums 
greater than £2. Mr. S. Dana Horton * seems to show that the 
Act of 1816 contemplated, on its face a free, coinage of silver, but 
that this result has failed for reasons of detail which were not 
fully contemplated by its framers. India gives free coinage to 
silver only, and is therefore a single standard country on the sil- 
ver basis. France and the United States had, prior to the 
fall in the value of silver bullion in 1873, given free coinage to 
both metals. France, since 1873, in company with Italy, Greece, 
Spain and other countries, forming what is called the Latin 
Union, has suspended the coinage of silver, to avoid the supposed 
drain of gold involved in its further coinage, while it is depreci- 
ated. France, Italy, and the United States, therefore, are double 
standard countries in principle, but are temporarily denying free 
coinage to silver, and therefore are temporarily running with 
gold as the only metal of unlimited coinage. Still, in all these 
countries, their own silver standard coins are absolute legal tender, 
to an unlimited amount, for all debts. Thej are, therefore, bi- 
metallic in pi'actice, with a temporary preference for the single 
gold standard not stronger than has on former occasions pre- 
vailed in behalf of the silver standard. 

G-ermany began in 1871 an effort to change from the silver to 
the gold basis, under the mistaken impression, as Lord Beacons- 
field declared, that it was the gold basis that made a country 
foremost in commerce, instead of its being its foremost position in 
commerce that would make the gold basis possible or fit for it.f 
Prior to this experiment of 1871, Germany had a total coinage of 
539 million marks of gold to 1, 940 million marks of silver, or 3 2-3 
marks of silver to 1 of gold. After twelve years of the experi- 
ment, the nature of the reserves held by the Imperial Bank of 
Germany, and which fairly indicate the kind of money in circu- 
lation among the people, was as follows : 

* " The Silver Pound," by S. Dana Horton, p. 161. 
t " Our gold standard," Baid Lord Beaconsfield, " is not the cause of our commercia' 
prosperity, but the consequence of our commercial prosperity ; and it is very well fo^ 
us to have it ; but you can not establish a gold standard by violent means. It must 
arise gradually from the large transactions of a country, and the consequent command 
it may have over the precious metals. When the various states of Europe suddenly 
determined to have a gold standard, and took steps to carry it into efiect, it was quite 
evident that we must prepare ourselves for commotions iQ the money market not occa- 
sioned by speculation or any old cause which has been alleged, but by a new cause 
with which we are not yet sufficiently acquainted, and the consequences of which are 
very embarrassing." (Speech at Banquet, Nov. 19, 1873, at City of Glasgow,) 



VALUE OF GOLD 

PRODUCED IN 

357YEARS. 

1493-1850. 

3,314,553,000 

DOLLARS. 



VALUE OF SILVER 

PRODUCED IN 

357 YEARS. 

1493-1850. 

6,741,705,000 

DOLLARS. 



VALU:E of GOLD 

PRODUCED IN 

25 YEARS. 

1851-1875. 

3,317,625,000 

DOLLARS. 



VALUE OF SILVER 

PRODUCED IN 

25 YEARS. 

1851-1875. 

1,395,125,000 

DOLLARS. 



RELATIVE VALUES OF GOLD AND OF SILVER PRODUCED IN TWO 
SUCCESSIVE PERIODS. 



SILVER IN GERMANY 



363 



Bank 

of 

Germany. 



Aug. 2, 1883. 

GOLD. SILVER. 

£7,667,850 £23,003,550 



Aug. 2, 1882. 

GOLD. SILVER. 

£6,985,000 £20,955,000 



The circulation was still 3|- times as largely composed of silver 
as of gold. In her experiment, Germany called in one hundred 
million marks of her old gold coinage, and left out 440 millions 
which she was not successful in calling in — perhaps in circula- 
tion, perhaps gone into other countries. But of her old silver she 
called in two hundred million marks, and left 440 million marks 
not found. Thus she had called in one-fourth of her gold, and 
two thirds of her silver. Between 1871 and November, 1878, Ger- 
many coined 1656 million marks of new gold coins and 426 mil- 
lion marks of new silver, or four of gold to one of silver.* But 
she did not succeed in changing her circulation, in the degree that 
she changed her coinage. 

In the Imperial Bank of Austria-Hungary the reserves are 
nearly two-thirds of silver, and in the Bank of the Netherlands 
they are about four of silver to one of gold. 

The standard of coinage of a country furnishes no index, there- 
fore, to the relative proportions in which the two metals will cir- 
culate in it. It may fix upon the single standard of gold and yet 
the chief part of its circulation may be silver. 

The economic judgment of Europe and America concurs with 
substantial unanimity, both among practical bankers and theo- 
retical economists, in the proposition that the two metals make a 
better equipoise against commodities than one alone would. If we 
suppose at random two lines of variation in value relatively to 
commodities, one for silver and one for gold, and then run a line 
midway between the two, the last will be most nearly straight. 
Thus : 




* Prof. Soetbeer in 1878 stated the coin circulation at, gold, 1,500 million marks, and 
silver, 807 million marks. He both ignored the old silver not called in, and assumed 
that the ratio of the two coins circulating was correctly indicate i by the change in the 
coinage, whereas much of the new German gold coinage went immediately into 
France. 



364 ECONOMIC PHILOSOPHY. 

So the line of fluctuation, in prices influenced by the joint action 
of both metals must be more uniform than one would be which 
was uifiuenced by either singly. 

Prices of commodities, however, are not influenced solely by 
their own volume, and those of gold and silver, but also by the 
volume of credit money which may be put forth, and by the ex- 
tent to which people may choose to give each other credit, and so 
substitute faith for value. Thus if A have a house, or mer- 
chandise, which he wishes to sell for $10,000 in order to meet a 
note, when, were it not for the note coming due, he would not 
sell for less than $12,000, no sooner does a friend offer to cash his 
note or advance the credit, than his merchandise or house advances 
from $10,000 to the $12,000 in price. So if silver bullion be sell- 
ing in London at 46d. per ounce, and a purchase of 1,000,000 
ounces would shift the market to 47cZ. per ounce, as it probably 
would, then a loan of $1,000,000 to a person willing to invest in 
silver would enhance the price of the silver by two cents on the 
dollar. Thus the price of the precious metals themselves would 
be gauged, to a degree, by the condition of the credit market. It 
has been objected, by a few theoretical economists, that the so-called 
double standard is in their view only an alternative standard — 
mankind always in fact making an exclusive standard of the 
money metal which is, for the time being, the cheaper of the two, 
and virtually relegating the dearer to the rank of a commodity, 
not only as to its bullion, but its coined value. Upon this pomt, 
Baron Alphonse de Rothschild, testifying befoi'e the French mone- 
tary commission of 1869, said: " Whether gold or silver domi- 
nates for the time being, it is always true that the two metals 
concur together in forming the monetary circulation of the world, 
and it is the general mass of the two metals combined which 
serves as the measure of the value of things. In countries with 
the double standard, the principal circulation will always be es- 
tablished of that metal which is the most abundant." It is also 
faintly and undecidedly estimated, by Gen. F. A. Walker,* that 
the process of substitution of the cheaper for the dearer of two 
metals, in a nation which maintains the double standard, involves 
some degree of loss, or friction, to the latter nation. Let us see 
whether this is true. Suppose silver to have fallen in value five 
per cent, relatively to gold, and France to be the double standard 
country, while England and Portugal have the single gold stand- 

* " Money, Trade, and Industry," p. 178. 































































































































































































































































































































































































































































































































































































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7 


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7 

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7 

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7 

to 




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7 


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7 
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7 


7 


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7 

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.-I W M 



IM C4 C4 



Ratio in weijxLt of Silver production to Gold production— on a scale of one (perper- 
dicnlar) section to the total production of Gold. 



PRODUCTION OF GOLD AND SILVER. 365 

ard. As bullion has but one market and one price for tlie whole 
world, the fall in silver bullion in London is the same as in 
Paris. There is, however, in London, silver bullion enough to 
coin 5,000,000 francs from, and it goes to Paris to be coined. 
Being coined, it is worth five per cent, more than uncoined, 
hence it can not be melted up or returned to England. It is 
an addition to the volume of French currency — not tempora- 
rily but jiermanently. It may be said it releases 5,000,000 francs 
of gold in France, which will therefore go to England; but 
wherefore will it ? Money does not flow to the points where 
there is least of it, but to those where there is most of it, i. e., 
where there is most use for it. The addition of the silver sup- 
posed, has a definite tendency toward a rise of prices in France. 
But wherever prices are rising, money has a new chance of 
profit. Gold may stay to get this profit. If it is at five per 
cent, premium in France and at no premium in England, who- 
ever changes the imported silver into the French gold pays the 
premium in France, and it stays there. France gets it. If, on 
taking the gold over to England, there is no premium on it 
there, then the premium is lost to the exporter. If the pre- 
mium there is the same as it is in France, he has made nothing. 

But if France steadily coins all silver that is presented into 
standard coin, which circulates in France on a level with gold, 
then silver bullion must inevitably advance to a level with 
gold bullion. Conceding that the double-standard country parts 
with a portion of her gold in the process, she makes two profits 
in doing so, viz., the iDi'emium on the gold she sells while silver 
is below par, and the rise, on the silver she buys, from its de- 
preciated price to par. An a priori probability exists, of the 
intrinsic profitableness of a country acting as a double standard 
country, and accepting a cheapened currency in exchange for 
the dearer one, since it always gets the premium on the dearer 
one, and the profit or rise to par on the cheaper one. There has, 
heretofore, been no other outcome to the double-standard process, 
when continued long .enough, than that the two money metals 
return to an equivalent value with each other at some ratio. 
This theory is confirmed by the fact that France, the most per- 
sistent of double-standard countries, has also been the country at 
all times most abundantly supplied with the coin of both metals. 

148. Rate of Pioductiou of Gold and Silver.— The ac- 
companying chart, of the rate of production of gold bullion and 
silver bullion, shows that nature imposes no limit, and exacts no 



366 



ECONOMIC PHILOSOPHY. 



equality or ratio, in the production of the money metals, gold, 
however, having been, since 1850, the most unequal of the two. 
The far greater inequality, in the production of gold than of 
silver, appears in the fact that, in the twenty-five years from 
1851 to 1875, the gold production of the world exceeded the total 
gold production of the world for the preceding 357 years, making 
the inequality one of fourteen-fold for ^ period of twenty-five 
years. On the other hand, the silver produced in the latter 
period was only one-fifth that produced in the former, while the 
time was one-fifteenth, being, therefore, only three-fold the pre- 
vious rate of production, an inequality only one-fifth as great as 
pertained to gold. Dr. Soetbeer's estimate on this point is as 
follows : 



1493-1850, 
1851-1875, 



Gold. 

13,314,553,000 

3,317,625,000 



Silver. 
^6,741,705,000 
1,395,125,000 



Upon this basis. Prof. Laughlin* presents the annexed dia- 
gram, illustrating the relative rate of production of the two 
metals by areas during these two periods. The diagram is in- 
genious. It seems, at first sight, to make out a case of equality 
in the production of gold, the nature of the equality being be- 
tween two periods, one of which is 14| times greater than the 
other. If the rate of production, per year, over the average of 
of the two periods, had been made the basis of comparison, gold 
would have shown a rate 14^ times greater in one period than 
in the other, and silver a rate 2| times greater. 

Prof. Laughlin, however, computes from Dr. Soetbeer's table of 
the production of the precious metals, the following figures, show- 
ing the comparative rate of production, by weight, of the two 
metals, viz. : 









Number of times 




Average yearly pro- 


Average yearly pro- 


the average yearly 


PEEIOD. 


duction of silver in 


duction of gold in 


production of silver 




kilogrammes. 


kilogrammes. 


was ereater than 
that of gold. 


1493-1520 


47,000 


5,800 


8.1 


1521-1544 


90,200 


7,100 


12.6 


1545-1560 


311,000 


8,510 


36.6 


1561-1580 


299,500 


6,840 


43.7 



* " Bimetallism in U. S.," p. 110. 



IN DIFFERENT 



AUSTRALIA. 

1852-1875. 

Isold, $i,263,87o,ooo 



SILVER, 117, 405 



MILLIONS 

-225- 



-200- 



150— 



-125- 



-lOO— 



-50 — 



l.soi- 
ISIO 



ISU- 

1820 



1S21- I.S.S1- 
1S30 IS 10 



IHU 1^-: 

ls.-,0 



MEXICO. 

1521-1875. 

GOLD, . .-$I8*,865,*00 
SILVER. 3,429,243.000 



CHART SHOWING THE PRODUCTION OF GOLD AND SILVER IN DIFFERENT 
COUNTRIES ACCORDING TO VALUE, 1493-ISSO. 



POTOSI AND BOLIVIA. 

1-545-1875. 

GOLD, $205,065,000 
SILVER, 1,697,292,000 



Silver.. 
Oold.. 



UNITED STATES. 

1821-1875. 
GOLD, $1,413,204,750 
SILVER, 237,217,500 



PERU. 

1833-1075. 

GOLD. •114,076,12.1 

SILVER, 1,404,990,000 



AUSTRALIA. 

1852-1079. 

GOLD, $1,263,070,000 




SILVER 


USSIA. 
.5720.074. 302 








AU«TR)*-M 












I4t3-1879. 
GOLD, t3t0.30l.0OO 


OOLO, $321 
SILVER, 349 


J 


z 




RATE OF PRODUCTION. 



367 









Number of times 




Average yearly pro- 


Average yearly pro- 


the average yearly 


PERIOD. 


duction of silver in 


duction of gold in 


production of silver 




kilogrammes. 


kilogrammes. 


was greater than 
that of gold. 


1581-1600 


418,900 


7.380 


56.8 


1601-1620 


422,900 


8.520 


49.6 


1631-1640 


393,600 


8,300 


47.4 


1641-1660 


366,300 


8,770 


41.7 


1661-1680 


337,000 


9,260 


36.4 


1681-1700 


341,900 


10,765 


-317 


1701-1720 


355,600 


12,820 


27.7 


1721-1740 


431,200 


19,080 


22.6 


1741-1760 


533,145 


24.610 


21.6 


1761-1780 


652,740 


20,705 


31.5 


1781-1800 


879,060 


17,790 


49.4 


1801-1810 


894,150 


17,778 


50.2 


1811-1820 


540,770 


11,445 


47-2 


1821-1830 


460,560 


14,216 


3-2.4 


1831-1840 


596,450 


20,289 


29.4 


1841-1850 


780,415 


54,759 


14.2 


1851-1855 


886,115 


197,515 


4.4 


1856-1860 


904,990 


206,058 


4.4 


1861-1865 


1,101,150 


185,123 


5.9 


1866-1870 


1,339.085 


191,900 


6.9 


1871-1875 


1,969,425 


170,675 


11.5 


1876-18S0 


2,500,575 


172,325 


14.5 



To accompany this table, I have constructed a chart, which 
shows very clearly the ratio of production of the two metals (the 
unit of measurement being the total gold production, of each 
period, whatever its quantity might be, by weight or qiiantity and 
not by value) from the discovery of America to date. 

The accompanying charts show the production of gold and 
silver in different countries, according to value, and in all 
countries over the period of time from 1492 to 1880. (From Dr. 
Soetbeer's " Edel. Metal Production," 1879.) 

The very considerable difference in quantity between the aggre- 
gate of the gold and silver produced, and the portion used in the 
coinage, expresses the portion used in the arts and as jewelry, 
and lost by abrasion and wear. Standard gold coin in use loses 
about ^J-u part of its weight each year by abi-asion. 

We are now in possession of most of the facts essential to de- 
termine what is called the silver question of 1872, to the present 
date. The causes of the cheapness of silver for fifteen years past 
may be divided, as to their relative potency, about as follows : 



TENTHS. 

1. Increased production of silver, from 1863-73, 1 

2. Diminished production of gold, and rise in value of gold 

relative to commodities, 1 



368 ECONOMIC PHILOSOPHY. 

3. Cessation of the drain of silver to India, 3 

4. Attempted change of Germany from silver mono-metal- 

lic standard to gold standard, 3 

5. Declaration for limited coinage of silver by France and 

other European States, . . . ~. 1 

6. Cessation of free coinage by U. S. in 1873, 1 

Total, 10 

Of these influences, the latter five-tenths are reversible. Mean- 
w^hile, the action of the United States, in refusing to discredit 
silver altogether, has done something to sustain its value. The 
disasti'ous consequences of diminishing the world's money one- 
half by discrediting silver altogether have been averted. Either 
Germany, the United States, or France, could probably have 
brought silver to par with gold by giving it free coinage at any 
time since 1878. Not having done so, silver will probably remain 
at a discount until one or more governments concur in giving 
it a freer coinage, or until an increase in the production of 
gold relatively to silver, or in the use of silver relatively to gold, 
either in coinage or in the arts, restores the parity. The relative 
rate of production of the two metals has no necessary or natural 
ratio. The rock on which Bimetallism, as a theory, rests, is 
that the perturbations in value of a currency depending on the 
pi-oduction of two metals will be less than in a currency depend- 
ing on the pi'oduction of either singly. 

The quicksand which has done most to undermine this rock 
has been the frequent and fallacious citation of what certain 
partially informed weather-prophets have supposed to be the 
operation of " Gresham's law." Sir Thomas Gi^esham stated very 
truly that if pai^t of the gold or silver coins of a given denomi- 
nation were adulterated, or made cheaper than the rest, by the 
extraction of part of their true metal, and the substitution of 
alloy therefor, the more alloyed coins would, if they succeeded 
in circulating at par, cause the melting or exportation of the pure. 
In this sense he taught that "bad money would expel good." 
But he never taught, as monometalists have so persistently 
urged, that if the entire bulk of pure bullion of the one metal, 
whether silver or gold, should fall in value relatively to the 
other, such a fact would tend to the exportation of the metal of 
higher bullion value.* As there would be no other country in 

* Jevons, in " Money and the Mechanism of Exchange," on p. 72, says : " Gresham's 
remarks concerning the inability of good money to drive out bad ocly referred to 
moneys of one kind of metal." 



CREDIT. 369 

which the fall would not be the same as in this, obviously, the 
coin of dearer metal would have no motive to flee to another 
market, since it could not gain in value by doing so. Yet on this 
basis, the years since 1878 have lowered with predictions that if 
if the United States continued to coin silver it would lose its gold. 
In fact, its stock of gold never increased 'so rapidly as during the 
next seven years. 

The factor wliich is more potential, in controlling prices of all 
commodities, than the supply of either gold or silver is credit. 
Credit does not have to be mined, assayed, coined, or weighed. 
In health, no economic factor is more useful. But in its epidemic 
fevers it becomes a fierce intoxicant. It then becomes a form of 
social insanity which may bear all before it. At the head of 
these epidemics of credit stand the Mississippi scheme of 1717 to 
1720,* the assignats of the French National Assembly in 1790, f 
and the silkworm speculations of 1829-30. J 

* John Law incorporated his Company of the West in 1717, with a capital of 200,000 
shares of "SOO livres each, with power to trade in Louisiana. It then comprised the 
present territory of the United States from the Gulf eastward to Florida and the Atlan- 
tic States, northward to the Hudson's Bay Company's grant, and west to the Pacific. It 
was to have exclusive power to trade, farm the taxes, and coin money, and was to be 
to two-thirds of the present territory of the United States what the British East India 
Company was to India. To this, in 1719, it added all the privileges of the French East 
India Company, with the monopoly of trading in the East Indies, China, and South 
Seas. Not only the street in which Law lived, but all Paris, was blocked by the hun- 
dreds of thousands anxious to get stock in the new concern. Law had been made 
Director-General of the Finances of France, 'The " Company of the Indies " merged 
with the National Bank, and 300,000 persons applied for its shares. Law promised an 
annual dividend of 200 livres per share, and received in payment the depreciated billets 
clebat (state notes), which made the promised dividend virtually 120 per cent. Early 
in 1720, holders began to convert their shares into gold and secrete the gold. Severe 
laws were passed against hoarding gold. But in July, 1720, the Bank stopped, the 
scheme collapsed, and Law fled from France. 

tThe asdgnats purported to assign to the holder national domain to the value of a 
certain sum. The land supposed to be assigned were the confiscated estates of the 
Church, and of the wealthy emigrants who fled to escape the terrors of revolution. The 
assignats, after falling (in 1796) to l-30th their par value, were redeemed at that rate in 
mai\dats, which gave the holder the right to take possession of lands at an estimated 
value, without a sale. These in turn fell to l-70th their value, in which stage they were 
gradually re-absorbed by the government in taxes or converted into rentes. 

t See " Silk," in ch. 16, jaost. 



CHAPTER X.. 

CRISES. 

149. Crises Definecl. — A crisis, panic, or revulsion is a with- 
drawal of confidence, and a reig-n of distrust, during which busi- 
ness is brought to a standstill, or to a chaos, by the voluntary re- 
fusal of those who are dealing in money or goods, to let them go 
on the ordinary terms. It viay be a refusal of the holders of 
gold or goods to accept bank-notes in payment, whereupon the 
holders of the notes pi'esent them for redemption in quantities 
larger than the banks can redeem. This is a run of notes for re- 
demption. It arises from a belief in the public mind that more 
notes have been issued than the banks can redeem. It was 
one feature of the crisis of 1837, in the United States, when 
the volume of notes was thirty-nine times in excess of the 
quantity of specie held for redemption. It had no part in the 
crises of 1797, 1807-9, 1816 to 19, 1825, 1847, nor 1867 in England, 
nor in that of 1857 in the United States. 

It may be a refusal of depositors to allow their deposits to re- 
main in the custody of the banks, which were previously deemed 
secure. In such cases they withdraw, either to hoard privately, or 
to place them in some other bank. Private hoarding is very cum- 
bersome, as a man would need a cart to carry away a very mod- 
erate sum. Removal to another bank immediately becomes 
a void act, if all the banks stand together. A run for deposits as- 
sumes that the bank loans have been unwisely made. But it 
would be necessary that it should not have loaned its money at 
all, if it is to pay all its deposits without breaking. A bank should 
be ready to redeem its notes, but solvency does not imply that it 
can stand a run for all its deposits, without selling out or collect- 
ing the securities on which the deposits have been loaned. But 
to be forced to do this instantly is liquidation, not banking. The 
crisis of 1857 in the United States was a run for deposits, and was 
met by all the banks shutting down together. The crisis of 1868 in 
England was a run on three or four leading banks, and the crisis 
or " obstruction " consisted in the fact that only the Bank of Eng- 



PRICES AND PANICS. 3 VI 

land could issue the additional quantity of bank-notes needed, and 
it refused to ask permission to do so, on the ground that it did not 
need them itself. More than one of the twenty leading banks could 
have drawn a check on the Bank of England, which would have 
closed its doors, or compelled it to ask permission to issue bank-notes 
on a deposit of secui'ities, which was all that was required to relieve 
the other banks. Failiiig to do so, the business and deposits of 
the banks which could not obtain the notes, were frightened into 
the Bank of England, generosity being thus rewarded with bank- 
ruptcy and churlishness by profit. The bank gained one-half in 
its deposits, and made the largest profit ever made by it in one 
year. Tliere has been no general run on deposits in the United 
States since 1857. 

All the above-mentioned are bank crises, monetary crises, or 
"money panics." These are a loss of faith by merchants in 
their banks. Where banks lose faith in merchants, by refusing 
to discount notes and bills, it is a commercial crisis. Tliis usually 
winds up a period of several years of ascending prices and quick- 
ened speculation, which, if they apply equally to all forms of 
property, are the exterior signs of a decline in the purchasing 
power of money, and will generally be traceable to an increase in 
the volume of money itself, or of some one or other of its many 
credit substitutes. 

In the crisis of 1825-6 in England, prices of all commodities 
rose from 70 to 100 per cent, within one year, and fell to their 
former level in the next, besides the whole people engaging 
in wild investments in South America mines. Insurance bubbles, 
Mexican projects, Darien Canal companies, etc. Shares would no 
sooner be i3ut out than they would be eagerly bought up at par 
and sent whirling up by competing bidders, as if their profits 
were certain, instead of impossible. 

A rise in prices pi^ecedes nearly all panics, whether commercial, 
banking, or financial. Hence it sometimes becomes a question 
whether the rise in prices has caused the inflation of paper money 
and credit, or whether the inflation of paper money has caused 
the rise in prices. In the crisis of 1825-6 ni England, three causes 
concurred to produce the inflation which began in 1821-2, and cul- 
minated in four years. These were : 

1. The resumption of specie payment in 1820-1, after the business 
of the country had been run)iing on paper only for nearly thirty 
years, had the effect to add to the effective currency the whole 
quantity of gold and siver coin which, during suspension, was 



372 ECONOMIC PHILOSOPHY. 

totally out of circulation, concealed, and selling as a commodity at 
a premium — and therefore exercising very little influence over 
prices. This great addition of coin to the circulation followed 
suddenly, at the close of a period which had necessarily been 
marked by the issue of paper enough to take the place of tlie coin 
hoarded during the war. The paper issues themselves, together 
with the scarcity and high profit of the war period, had main- 
tained a high rate of prices during the period, until the collapse 
in prices which came with the peace. Low prices, on all home 
products, concurred with a large increase in the volume of effec- 
tive money, to stimulate investment in foreign loans. Owing to 
the increase in the volume of money, something had got to go up 
in pidce. Domestic products, and means of subsistence, could not 
go up, because known to be so abundant. But the distant, the 
novel, and the unknown can always be made the theme of 
exaggeration. 

2. In 1820 to 1822, the government reduced the rate of interest on 
consols, and in so doing caused many holders to desire new invest- 
ments of like kind, in appearance, i. e., of loans. This caused a 
readiness to invest in that peculiar class of South America loans, 
and mines, and joint stock companies, wdaich marked the crisis of 
1825. A vivid picture of the result is given by Miss Martineau * 
The failure of returns from the foreign investments came first. 
Then a contraction of its accommodations by the bank of England. 
Then failure, in December, 1825, of about sixty country banks, 
besides several leading banks of London. Then long lists of 
factories closed, riots by discharged weavers, who in one day 
destroyed every power-loom in Blackbourn or within six miles of 
it. At Carlisle the weavers demanded free corn, and at Trow- 
bridge people insisted that the gardeners and green-grocers were 
cornering the potatoes. In Dublin the starving silk-Aveavers de- 
manded that the subscriptions raised for them be applied to clear 
off the manufacturers' stocks, thus creating a demand so that they 
might go to work again, f 

Economists have not usually applied Gregory King's law of the 
effect of scarcity and excess of supjily of commodities, to money, 
itself the standard of prices. Evidently, however, as in the case 
of wheat so in the case of money, a scarcity, or superabundance, 
would tend to produce a rise, or fall, of prices, in a ratio much 

* " History of the Peace, " vol i. p. 354- 

i- Martineau's "History of tlie Peace," vol. i. p. 367. 



FALLACIOUS PREDICTIONS. 373 

greater than the actual scarcity or superabundance. Panics break 
out in an unexpected manner, without definite prognostication on 
the part of tliose supposed to be experts, and run in a rattling 
thunder of successive failures and downfalls, concerning which 
many will afterwards say significantly " I knew it," but of which 
no anterior warning could by the most inquisitive process have 
been obtained. The financial experts frequently predict crises, 
and crises frequently occur, but by some singular maladjustment 
of the prophetic power, or some obstinacy in finance, the crises 
which are predicted never occur, and those which occur ai'e sel- 
dom predicted. Thus Cernuschi came from France, in 1878, to 
assure Congress that, if it should adopt the act for the limited coin- 
age of silver, its action would immediately result in a monetary 
crisis, and a drain of gold. The act was adopted, and under its 
operation the quantity of gold in the country accumulated more 
rapidly than ever before, and about twice as rapidly as the silver. 
Yet, occasionally, monetary crises are foretold with a degree of 
accui'acy, through some correct estimate, based upon a sound 
principle. Thus it appears from Adam Smith's allusion to Mr. 
Meggins,* that that nearly unknown economist, reasoning that 
the annual production of silver was twenty times greater than 
that of gold, but that the drain of silver for India left its supply 
for Europe only from fifteen to sixteen times greater, inferred 
that it was the drain of silver to India that maintained the 
ratio of values between the two metals in Europe at one to 
fifteen and a half or sixteen ; hence, that if the drain should 
cease the ratio would fall to that of one to twenty, or one to 
twenty-two — ^the ratio of their production. Both. Smith and 
McCulloch combated Meggins' prediction satisfactorily to them- 
selves, but in 1871 the drain from India ceased, and forthwith 
the value of silver fell exactly as Meggins more than a century 
previously had predicted , thus producing, at least in jjart, that 
monetary crisis in the precious metals which has now prevailed 
thi'oughout the world for sixteen years. The pretended ability 
to predict financial crises is often resorted to in practical politics 
as a means to the accomplishment of immediate results, or to 
carry an election. Thus in 1872 the chief and most effective cry 
i-aised to defeat Mr. Greeley, as a candidate for the Presidency, 
was that his pressure for an early resumiition of specie payments 
would bring on a financial crisis. General Grant was elected, 

* " Wealth of Nations," by McCulloch, p. 97. 



374 ECONOMIC PHILOSOPHY. 

and without any such pressure the financial crisis came in 1873, 
and lasted during- his entire term. 

In England there were financial or commercial crises of a 
marked character in 1793 to 1796, 1817 to '19, in 1821 to '26,* in 
1836-7, in 1846-7, in 1857, and in 1867. In 1877 there was a wide- 
spread derangement of industry, but it did not reach the banks. 
In the United States there were simultaneous and sympathetic 
crises in the same years, except in 1827, 1847, and 1866. It is a cur- 
rent saying among experienced merchants, therefore, that in 
America a crisis is due every twenty years, and in England every 
ten years. The truth of this saying has been subjected to a recent 
crucial test by the fact that according to both maxims a crisis 
was due in both countries during the year just past. In the United 
States its recurrence at the accustomed period seemed the 
more probable from the fact that a long-continued process of 
extinguishment of national debt, which, as we have seen in a pre- 
vious chapter, is a form of international credit currency, closely 
affiliated in its effects to paper money, was terminating in an 
impending extinguishment of the national bank currency through 
the calling in by the government of the bonds on which the notes 
of the banks rested, and the enforced retirement of the notes by the 
banks in consequence. Nevertheless, no crisis came. 

150. Crises Produced by Excessive Importation of 
Coinpetiiig Products. — The incidents of commercial crises are 
so much alike, and are told by all writers in so nearly the same 
terms, that the following desci-iption by McCullochf of the crisis of 
1847 in England, which followed the repeal of the duties on the 
importation of corn in 1846, and the general bankruptcy of the 
farming interest resulting therefrom, may be taken as a sample 
and example of all crises. The act of 1844 had provided that no 
new joint-stock banks should be created, that the banks then ex- 
isting should be limited to the amount of notes they had issued 
during the twelve months preceding the passage of that act, and 
that the Bank of England should issue no new notes except on 
the deposit of a gold sovereign for every pound note issued. This 
restiiction was suspended to enable the Bank of England to sup- 
ply, by paper, the money that could not be obtained in coin. It will 
be seen, in McCulloch's statement, that the "unprecedented im- 

* A detailed account of the exterior incidents of the commercial crisis of 1824-6 may 
be found in Miss Martineau's "History of the Peace." The economic incidents of the 
periods 1819 lo 1837 are analyzed in " Carey's Harmony of Interests." 

t Note IX., on Money, to " Smith's Wealth of Nations," by McCuUoch, sect. v. p. 507. 



A DRAIN OF GOLD. 375 

portation of foreign food " is the cause of that drain of gold which 
brings in the crisis. He says: "The crisis of 1847 was a conse- 
quence, partly of the railway mania of the previous year, and part- 
ly of the failure of the potato crops of 1845 and 3846. The failure in 
the latter year deprived fully two-thirds of the people of Ireland, 
and a considerable portion, also, of those of Great Britain, of 
their accustomed, supplies of food. In consequence of this de- 
ficiency, and of government having come forward to provide the 
means for its relief, there was an unprecedented importation of 
all sorts of corn; and the demand for bullion for exportation to 
meet this importation, occurring simultaneously with a vast rail- 
way expenditure, pecuniary accommodations were obtained with 
the greatest difficulty, and the rate of interest rose to an extraor- 
dinary height. Instead, however, of being increased by the Act 
of 1844, it is abundantly certain that the operation of the latter 
contributed to alleviate the severity of the crisis. The restraints 
it imposed on the issues of the country banks had hindered them 
from embarking to any great extent in railway adventures, so that 
they were better able to assist their customers ; and it also pre- 
vented the Bank of England from attempting to meet the exigen- 
cies of the case, otherwise than by raising the rate of interest, 
and restricting her issues. And besides being the natural and 
proper, these were, in fact, the only means by which the value of 
bullion could be raised in this country, its demand for foreign 
remittance checked, and the exchange turned in our favor. A 
great many mercantile houses that had been trading upon very 
insufficient capitals, or which had previously been virtually in- 
solvent, were, of course, swept off during the crisis ; and the 
alarm that was thereby occasioned, though for the most part 
without any good foundation, gave rise to a species of panic. 
During the prevalence of the latter, government consented (25th 
October, 1847) to a temporary suspension of the Act of 1844. But 
there is, we believe, little doubt that this was an unwise proceed- 
ing. When it took place the violence of the crisis had abated. 
The drain for gold for exportation had not only ceased, but it had 
begun to set in our favor ; and the probability is that in a few 
days all alarm would have passed off, without the dangerous pre- 
cedent which was set by the interference of ministers." 

The repeal of the corn laws had not made corn cheaper to the 
people of England in any material degree, if at all. It had 
changed the source of supply from Ireland, Scotland, and Eng- 
land to foreign countries. The ' ' Encyclopedia Britannica " says, 



376 ECONOMIC PHIL SO PHY. 

"The production of wheat in Scotland and Ireland fell ofT one- 
half," and "in the seven years ending Christmas, 1846, the prices 
of wheat and its substitutes per bushel had been : Wheat, 7s. id. ; 
barley, 4s. ; oats, 2s. 8id. ; total, 13s. 9d. ; while the prices for the 
seven years endijig- 1875 were: Wheat, 6s. 6id. ; barley, 4s. lOd. ; 
oats, 3s. 2id. ; total, 14s. 71d." The free importation of foreign 
corn did not permanently reduce the price of corn, but substituted 
the foreign for the domestic supply. The domestic production 
declined one-half, in Ii'eland and Scotland, to make room for the 
increased importation of foreign food. The drain of gold required 
to pay for this increased importation caused the financial and 
commercial crisis of 1847 in England, at a time when there was 
no financial crisis in any other country. Hence has resulted two 
syllogisms, which are alike as to their major and minor premise, 
but differ only as to the conclusion. They may be called the corn 
law syllogisms, and run thus : 

Major Premise. — The free importation from abroad, of products 
which a country has the natural facilities for producing, or has 
produced or can conveniently produce, does not cheapen per- 
manently or substantially the supply of the product, but displaces 
the domestic by the foreign product, thus tending toward a dis- 
ruption of domestic industries, a drain of gold, a run on the 
banks, and a financial crisis. 

Minor Premise. — ^Eugland attempted, in 1846, to get cheap bread- 
stuffs by withdrawing protective duties from her farmers and 
accepting free importation from abroad, and in so doing she got 
no cheaper breadstuffs and no more of them, but caused a cessa- 
tion in her domestic production, exactly equal to her importation, 
thus resulting in a disruption of her industries, a drain of gold, a 
run on the banks, and a commercial crisis. 

Conclusion, among distant economists, that the repeal of the 
corn laws caused the crisis of 1847. 

Conclusion., among English economists, that the crisis of 1847 
was due to causes unknown. 

151. Competing Imports Again the Cause. — In treating 
the crisis of 1857 in England, the same English economist, Mr. 
McCulloch, fully agrees with our American economists, and with 
the American people generally, in holding that it was caused in 
England as a reflex effect of general bankruptcy in the United 
States, and that it was caused in the United States by buying of 
England goods which competed with and disj)laced our own pro- 
ducts, and which we had no means to pay for, and ought not to 



' ' VERTBADING. " 311 

have bought. The deftness with which Mr. McCuUoch admits all 
the facts, while endeavoring to conceal their economic inference, 
leads us to quote also his statement of the crisis of 1857. He says : * 
"The circumstances that led to the suspension of the Act of 
1844, in 1857, were somewhat similar. The real value of our 
exports to the United States in 1856 amounted to 21,476,000Z., 
and, in addition to this immense sum, a large additional amount 
was due to this country, on account of dividends on state, rail- 
way, canal, and other stocks, etc. Unluckily, however, all, or 
nearly all, the American banks stopjjed payments in 1856 and 
1857 : and the losses that were thus occasioned, coupled with the 
consequent reduction and cessation of remittances, produced 
much distress among great numbers of the merchants and others 
engaged in the American trade. And it was among them, or 
those immediately connected with that trade, that the greatest 
overtrading and abuse of credit had taken place. Some firms in 
Glasgow, which had been notoriously overtrading for a number 
of years, were the first to give way ; and, their failure being on a 
very large scale, the banks by which they had been principally 
supported became the objects of suspicion, and from suspicion to 
distrust there is but a step. Notwithstanding the numbers and 
wealth of the shareholders responsible for the banks in question, 
they were subjected to a run on the part of the inferior class of 
note-holders and depositors, and, their resources being either 
anticipated or locked up, they were obliged to suspend paj^ments. 
And had they only failed none could have regretted the result. 
On the contrary, it would have been nothing more than they 
deserved, for they had for a lengthened period grossly abused the 
ample resources at their command, and resorted to the most ques- 
tionable means to bolster up the speculators with whom they had 
become identified ; but the mischief is that the disastrous effects 
of such proceedings can not be confined to the guilty parties. A 
fire originating in a pig-sty may destroy a palace. The suspension 
of the offending banks, by generating uneasy feelings and sus- 
picions in the public mind, led to a run on some of the other 
banks. And to provide for their own safety, these establishments 
immediately began to sell securities and to adopt other means by 
which to obtain supplies of gold. Large amounts of it were in 
consequence carried to Scotland. And, in addition to the demand 
for gold, the demand for discounts, notwithstanding the high i-ate 

♦ " Wealth of Nations," etc., p. 507. 



378 ECONOMIG PHILOSOPHY. 

of ten per cent, charged by the bank, continued undiminished, 
so that the reserve in her possession was reduced on the 11th of 
November to 1,462, 153Z.; and it was the general belief that this 
inadequate reserve would be forthwith either much reduced or 
wholly swallowed up. To avert the possibility of such an event 
occurring, the directors were authorized, on the 12th of November, 
to issue notes without being bound by the conditions of the Act 
of 1844. This, though a brief, is a sufficiently accurate account of 
the leading circumstances that occasioned the suspension of the 
Act in 1857." 

Victories and reverses attend all forms of warfare. The com- 
petitions among the producers of populous nations, in the produc- 
tion of the same products, are a state of economic war, and are 
attended by some of the wastes of war. These are shown to be a 
leading factor in causing commercial crises. 

152. Exhaustion of Capital. — Crises are also, by some, 
attributed to the exhaustion of capital in great public improve- 
ments, and in great wars, or in mines, ships, factories, or other 
forms of reproductive wealth, that do not at first produce a 
profitable return. Prof. Bonamy Price has pressed this theory 
strenuously. He says : ' ' The causes which make the receipts of 
bankers dwindle away are in the main two — first, a diminution 
of the sale of goods, such as occurs when trade is bad, and stocks 
of merchandise accumulate for want of purchasers, or when the 
harvest is deficient, or when cotton is scarce and dear, and the 
consumers of cotton goods reduce their consumption ; and, 
secondly, a diminution of profits, leaving small margin for 
savings, and reducing the quantity of uninvested savings, which 
form a large portion of the means at the disposal of bankers. 
These two causes may be summed up in. one — loss of wealth, 
whether positively, by its actual destruction, or negatively, by a 
failure in its ordinary rate of accumulation. Here I must point 
out a mode of impoverishing a nation for a time, which is little 
heeded in the city, though it tells most powerfully on the resources 
of bankers. Most persons are satisfied if an undertaking is sound 
in character — if it is no bubble, but a solid investment. They 
make no further inquiry ; they press it forward, and preach to 
bankers that they are safe, and even patriotic, in promoting such 
enterprises. Such are works of drainage, railways, docks, canals, 
and the like. No doubt they are all highly promotive of wealth. 
The growth of a nation in well-being and greatness largely turns 
on the prosecution of such works. But no one stops to reflect 



PRICE ON CRISES. 379 

that such operations destroy wealth and diminish resources, until 
they are capable of yielding- profitable returns. Nothing enriches 
a country like a well-planned railway ; yet railways are nothing 
but a gigantic destruction pi wealth till they are at work. They 
employ an enormous mass of labor; they use up huge quantities 
of iron and other materials which have been produced by the 
consumption of wealth. Hosts of laborers have been fed and 
clothed during their construction; tools have been worn out; 
materials have been used up. And what has been the result ? A 
change in the surface of the land. No one doubts that, if the 
laborers employed in making the railway had been set to dig 
holes in the ground and fill them up again, a flood of poverty 
would have overspread the country. The food of the laborers 
would have been lost and not replaced. In what respect, for the 
time, do the embankments and tunnels of a railway differ from 
such holes ? In the future they may and will generate vast 
wealth — for the present, they are a pure and uncompensated loss 
of the public wealth. Nations ought to make railways ; they will 
be far richer by making railways ; and bankers, in days to come, 
will have much more to lend to borrowers. But, if nations are 
not to feel impoverishment during their construction, they must 
be made out of savings, that is, out of the food, clothing, and 
materials produced in the country in excess of the quantity 
consumed. 

' ' New enterprises there ought to be and will be in a growing na- 
tion ; but they should be limited by its means, that is, by its sav- 
ings. It is a most momentous question to determine what these 
savings are, as a matter of fact, and unfortunately it is a 
most difficult one. It is always very hard to say how much 
drainage, how many railways and openings of mines and new 
factories England can afford to make, and an estimate of its 
amount is necessarily vague. Still, the signs of excess become 
sufficiently prominent to enable a watchful eye to detect them." 

Reduced to a nut-shell. Prof. Price's theory would be that a 
sufficient lapse of time between the investment of circulating cap- 
ital (money) in the creation of fixed capital (reproductive wealth) 
and the reaping therefrom of a satisfactory income, might 
bring on a financial, monetary, or commercial crisis. This 
remains a mere priori .speculation, however, iintil it shall be con- 
nected with such facts, in a specific instance, as satisfy the mind 
that a crisis was produced by lapse of time between investment 
and the returns from reproductive capital. 



380 ECONOMIC PHILOSOPHY. 

153. Great Wars Seldom if Ever Produce but Often 
Avert or Remedy Crises. — Great wars are sometimes assumed 
to be fitting causes to which to attribute commercial crises. They 
involve, however, a double action. They exhaust resources, but 
if these resources happen to be a glut of unsalable products, this 
exhaustion by removing the glut sets the wheels in motion, hav- 
ing the effect of a wider market or an increased consumption. 
They call for large expenditures of money, but they frequently 
manufacture most of the money they call for, and by adding to 
the volume of paper money they raise prices and induce that feel- 
ing of profit and success in all occupations which stimulates 
effort. They also, by endangering the accumulations of the rich, 
render them generous in giving part to save the whole. They 
stimulate the feeling of mutual dependence and reciprocal sacri- 
fice in both poor and rich, terminating for the time the parsimony 
of the latter and the discontent of the former, and welding society 
into a more highly organized unity. All these influences increase 
the activity of the societary movement and the rate of production. 

Hence many nations have made their most rapid advancement, 
and the rise from poverty to wealth has been most easy, during 
or immediately after great wars. In the Northern States, during 
their war with the Confederacy, the bounties offei'ed by Federal, 
State and municipal authorities on enlistment rose to from $1, 000 to 
$1, 500 per man, thus making manhood more valuable relatively to 
capital. Long periods of peace, however, tighten the ascendency of 
capital over labor, and it is doubtful if they do not increase the 
timidity of capital in embarking in new enterprises. The period 
from 1805 to 1816, botli in the United States and England, was a 
period, the first part of which represented partial or total embar- 
goes on foreign trade, and the last years of which were war. Yet 
these were years of great prosperity to the common people, while 
the ten years of peace and free intercourse, immediately following, 
were years of destitution in both countries. Wheat in the United 
States for the five years, 1810 to 1815, held an average price in 
the United States of $11.60 per barrel, while in the ten years after 
the war it was from $4 to $1.25 per barrel, or twenty cents per 
bushel. At Pittsburg a ton of bar iron cost eighty barrels of flour. 
The cotton manufacture had increased ninety-fold under non- 
intercourse. Instead of absorbing 1,000 bales it absorbed 90,000. 

The intimate relation between the high prices for products, that 
are incident to periods of war, and the prosperity of the working 
and business classes, may be seen by noting the rise in the prices 













































































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ffl MOVEMENT OF PRICES OF FORTY COM^ 'ODITIES, 

FROM 1782 TO 1865 

^Jt.voTUl Ovrrency and J Inamce ' 7>p ;/./. 6 ) 





PEACE AND DISTRESS. 381 

of different commodities shown by the accompanying chart pre- 
pai'ed by Prof. Jevons for England, with modifications by Prof. 
Laughlin. It applies equally to the United States as to the first 
war period, and far better as to the period from 1860 to 1866, since 
as to the latter the chart expresses a rise in England which was 
only sympathetic with the far greater rise in the United States. 

In tlie United States, in 1816, the vast importations caused by the 
sudden removal of the discriminating duties which had pi'evailed 
since 1790, caused an immense cessation in domestic production. 
Young as our industries, and sparse as our population, then were, 
70,000 operatives were discharged in a single year, and driven 
into idleness or agriculture. 

Although in theory the world was open to our products, Avhile 
during the war it had been closed against them by the Berlin and 
Milan decrees and the English and French navies, yet in fact the 
breaking down of our manufactures so impaired the prices of 
agricultural products that crops would hardly pay for mai'keting, 
and the cost of producing them was a net loss. 

The return of peace caused so great a prostration of manufac- 
tures and agriculture, partly because the commercial treaty of 
1816, though designed to be protective, provided no adequate pro- 
tection to the industries that had been called into existence by the 
war. Our imports rose from about $20,000,000 in 1814 to about 
$150,000,000 in 1815. American workmen had the benefit of 
cheaiJ markets for a few months, and, in return, were turned out 
of employment for many months. Instead of buying the farmers' 
crops, they went to raising them as long as there was a hope of a 
market, and, when that stopped agricultural industry was as 
pi'ostrate as manufactures. England could sell us our hardware, 
clothing, tools, furniture, and many of our groceries; but she 
could not buy our hay, j)otatoes, oats, very little of our corn, and 
none if European crops were abundant, nor any of our timber, 
butter, eggs, cheese, milk, or lard, veiy little of our meats ; and 
she could not hu'e our workmen, or employ our labor, or use our 
idle factories, furnaces, mines, or machinery. In 1818-19 there 
came ujDon the country the severest commercial crisis it had ever 
known — the result of three years of that kind of diminution of 
domestic production which results fi-om freer importation of 
foreign competing goods. 

In review of this period, 1819 to 1824, Andrew Jackson, thesi a 
candidate for the Presidency, wrote to Dr. Coleman these words : 

" I will ask what is the real situation of the agriculturist? 



382 ECONOMIC PHILOSOPHY. 

Where has the American farmer a market for his surplus pro- 
duct ? Except for cotton, he has neither a foreign nor home 
market. Does not this clearly prove, where there is no market 
either at home or abroad, that there is too much labor employed in 
agriculture, and that the channels for labor should be multiplied ? 
Common sense points out the remedy. Draw from agriculture 
the superabundant labor. Employ it in mechanism and manu- 
factures, thereby creating a home market for your bread-stuffs, 
and distributing labor to the most profitable account, and benefits 
will ensue to the country. Take from agriculture in the United 
States six hundred thousand men, women, and children, and you 
will at once give a home market for more bread-stuffs than all 
Europe now furnish us a mai'ket for. In short, we have been too 
long subject to the policy of British merchants. It is time that we 
shall become a little more Americanized, and, instead of feeding 
the paupers and laborers of Europe, feed our own ; or else, in a 
short time, by continuing our present policy, we shall be paupers 
ourselves." 

154. The American Crisis of 1837.— The crisis of 1837 is 
generally known as a bank or monetaiy crisis, due immediately 
to excessive inflation of prices, by large issues of paper money by 
banks. 

It manifested itself in a general suspension, by banks, of specie 
redemption on their notes, and inability to pay deposits in accept- 
able bills. Among merchants, farmers, and business ixien of 
every class, there was no money of any value, and trade returned 
largely to trust, barter, or no trade at all. This inflation in paper 
money, however, was itself an effect of anterior causes, and 
rightly to apprehend these it is necessary to begin with the year 
1824. 

In 1824, after ten years of peace, stagnation in trade, and agita- 
tion of the question of protection to American industries, a pro- 
tective tariff was enacted, and in 1828 its rates were increased.* 

* The changes made in the tariff as indicated below are a fair exhibit of the multi- 
plicity of objects on which a protective tariil must rest, in order to do justice to all and 
be invidious towards none in a country which possesses all the natural facilities for 
producing nearly every thing, and where the object of the duty is to cause the artificial 
facilities, capital, machinery, etc., to be applied. 

Adzes and axes, free from 1816 to 1828, were subjected to an import duty of 35 per cent. 

Ale, porter, and beer payiug, 15 cents per gallon from 1816, were put up to 20 cents. 

Anvils, free from 1816, paid 2 cents per pound from 1824. 

Arms, paying 20 per cent, in 1816, paid 30 per cent, from 1834. 

Bacon and hams, at first free, paid 3 cents per pound. 

Beef, at first free, ])aid 2 cents per pound. 



THE TARIFF OF '28. 383 

The effects of the tai'iff of 1824-28 were to stop, and reverse, the 
expoi't of gold and silver, with which we had previously been 
paying for our excess of imported mei'chandise over exported 
products. Having bought more than we could pay for, with our 
products, we were in the position of a farmer who is compelled to 
part with his implements, in lieu of his products, in order to pay 
his debts. The fact that gold and silver were then, in some small 
degree, a product of our mining, did not lessen their far greater 
importance as the implement of our domestic commerce. 

From 1821 to 1825, according to H. C. Carey,* the excess of 
exports over imports of specie wei^e $12,500,000 per year, besides 
which we were using up in the arts as much more of gold and 

Blacksmiths' hammers and sledges, free from 1816, were made to pay 2}^ cents per 
pound from 1824. 

Blankets of wool, free from 1816, were placed in 1824 under a duty of 25 per cent ., 
which was increased in 1828 to 35 per cent. 

Bonnets of silk remained at 30 per cent, as in 1816, but those of straw, palm leaf, leg- 
horn, and chip were raised in 1824 to 50 per cent. 

Books, for schools, colleges, and the Congress library were left free, but those in 
Latin and Greek were in 1824 put up to 15 cents per pound, and all others to 26 cents 
bound and 30 cents per pound unbound. 

Boots and shoes, both men's and women's, remained as in 1816, under a duty of $1.50 
per pair. 

Brass and its manufactures were raised from a duty of 20 per cent, to one of 25 per 
cent. 

Butter, in 1816 free, paid from 1824 5 cents per pound. 

Carpets, in 1816 free, passed under a duty in 1824 of from 20 to 50 cents per square 
yard, which was increased in 1838 to from 30 cents to 70 cents per square yard. Car- 
riages continued at 30 per cent., cheese at 9 cents per pound, china-ware at 20j)er cent., 
and cinnamon and cloves at 25 cents per pound, cocoa at 2 cents, and coffee at 5 cents 
per pound. 

Eaw cotton remained at 3 cents per pound, while cotton bagging, which had been 
free in 1816, was put under a duty of 3% cents, in 1824 increased to 4i^, and 5 cents in 
1828. Cutlery had been from 1816 under a duty of 20 per cent, to 25 per cent., and on 
cutting knives 30 per cent., which was increased in 1828 to 40 per cent. 

Drugs for dyeing were advanced from a duty of 7J/^ to one of 12i^ per cent. Russia 
duck. Ravens, and Holland were advanced from a duty of $1 .25 to $2.50 a piece to one 
of 9 cents per square yard. 

Flannels, free in 1816, were raised to 30 per cent. 

Raw flax in 1828 was dutied $35 to $60 per ton. 

Duties on glass were raised according to quality. 

Raw hemp was put up from $1..50 per cwt. to $45 and $60 per ton. Hosiery in 1828 
■was made to pay 35 per cent. Iron was scheduled in twenty-three forms, of which bar 
iron, which had paid $1 .50 per cwt. from 1816, was raised in 1828 to $.37 per ton. Laces 
and jewelry were put up from a duty of 7)^ per cent, to one of 12}^ per cent. Pig lead 
was put up from 1 cent per pound to 3 cents. Paper was taken from a 30 per cent, ad 
valcyrem duty and placed under a series of specific duties ranging at from 3 cents to 20 
cents per pound. Brown and white sheetings remained unchanged at $1.60 per piece 
for brown and $2..50 for white. In all, 821 articles were classified as paying duty. 
* " Social Science," condensed by McKean, pp. 292-5. 



884 ECONOMIC FHILOSOPEY. 

silver coined or uncoined, being a total subtraction from circula- 
tion of the chief instrument of commerce of $35,000,000 a year. 
Nor was there any production of precious metals, in the United 
States, prior to 1850, or coinage at the mint, adequate to supply 
this drain. Frem 1790 to 1852, the mint only coined $3,506,890 
in silver dollars in all the seventy-two years, and only about twice 
that sum in quarter-eagles. From 1811 to 1834 we coined no gold, 
and from 1833 to 1834 no standard coins of silver. Being virtually 
dependent on imported Spanish and Mexican coins for our specie 
money, a drain of specie such as that which ensued from 1817 to 
1834 left us without trustworthy money, and dependent wholly 
on the paper issues of the banks. 

By the tariff of 1824 the drain of gold was so far reversed that 
the following four years witnessed the small total, net excess of 
import over export, of $4,000,000. The ensuing years from 1830 
to 1834 show an active growth of manufactures, an excess of 
import over export of the precious metals of $4,000,000 a year, an 
extinguishment of the national debt, and an agitation of the 
question of dividing the surplus moneys in the Ti^easury of the 
United States among the States, which did not, however, become 
a law until 1836, when the epoch of general bankruptcy was ap- 
proaching. 

By 1833-3, however, a tide of agitation against the tariff of 
1838 rose, in South Carolina, into threats of secession. Mr. Clay 
proposed, and President Jackson sanctioned, as a compromise, a 
sliding.scale of reduction, which went into effect March 3, 1833. 
The effect was greatly to increase the importations of competing 
goods in many lines, which, under the protection of 1838-30, the 
country had begun to produce with energy. The period of 1888 
to 1830 had been marked by the introduction in the legislatures 
of Virginia and Kentucky, for the fii-st and last time, of a propo- 
sal to emancipate the African slaves, whose average value was 
then about $350 per head. The belief was then gaining ground 
that emancipation would gradually reach t-he South, in the same 
easy manner as it had triumphed in the Northern States. The 
same expansion of the cotton crop, in the Southei'n States, which 
incited South Carolina to oppose protection to the cotton manu- 
facture in the United States, also caused a rapid rise in the price 
of slaves to $1,000 and $3,000. This put a quietus on all projects 
looking toward emancipation. Meanwhile, imports of merchan- 
dise, which had been $67,000,000 in 1829, and $02,000,000 in 1830, 
rose to 101 millions in 1833, 108 millions in 1834, 101 millions in 



THE CRISIS OW 1857. 385 

1835, aud 106 millions in 1836, resulting in an excess of imports 
over exports of $112,000,000 in the three years 1835, 1836, aud 
1837. 

These large importations of foreign goods, sent to our auction 
rooms by importers and traders, Avere sold at low rates, if for 
cash, and on long credits, if for time. The notes given for them 
swelled the volume of commei^cial paper seeking discount, and 
the large "shave," or rates of discount paid, increased the profits 
of banking, and the temptation to found new banks for the issue 
of paper money on very flimsy securities. With the proceeds of 
these notes, new goods were bought abroad, and, with the infla- 
tion in the volume of paper money, prices of lands, as well as of 
goods, rose on every hand. Hence most, if not all, the causes 
operating to produce the crisis of 1837 begin their operation with 
the repeal in 1833 of the pi'otective system of 1828, and the de- 
struction of domestic industries by the large influx of competing 
goods. To these are to be added the feverish nature of the pros- 
perity imparted to the South by the rapid ex^jansion in its cotton , 
sugar, and tobacco industries, under the stimulus of cheap Afri- 
can labor, and the great expectations felt in the North, under the 
stimulus imparted by the discovery that steam transportation 
was about to make the vast and fertile territory, to the north and 
west of the Ohio, easily accessible to the mai'kets of Europe. 

155. Crisis of 1857. — Commercial crises have in some in- 
stances been immediately preceded, and possibly in part produced 
or heightened, by the increase in the volume of the precious 
metals, through them of credits, and finally of importations. 

The crisis of 1857 in the United States followed upon an expan- 
sion of credits, which reached its climax in the years 1851 and 
1852, and which by the winter of 1853 had collapsed into a period 
of commercial stagnation known as the " hard times " of 1853-4, 
which continued growing more severe, until the bank crisis of 
1857. Industries generally met with no relief until the revival 
of business in 1862 and 1863. This entire period seemed to have 
for its two exciting causes the heavy importations of competing 
English goods induced by the low duties adopted in 1846, and the 
vast expansion of credits incident to the additions made by the 
gold mines of California and Australia to the world's supply of 
specie. The total gold coinage of tlie United States from 1792 to 
1849 had been only $85,588,038. 

That of Great JBritain from 1816 to 1851 had been only $480.- 
105,755. That of France from 1793 to 1851 had been only $314,- 



386 ECONOMIC PHILO SOPHY. 

491,516. in the fifteen years, from 1851 to 1866, there was coined 
of gold a sum equal, 

In Great Britain, to, : $455,233,695 

In France, to, 987.728,298 

And in the United States, to ... . 665,352,323 



Total, .... $2,108,314,316 

At first it would seem that this enormous addition to the 
money supply ought to have made money abundant, and 
business of all kinds prosperous, in the United States, instead of 
producing stringency as early as 1853-4, continuing for the next 
seven years. In the winter of 1853-4 processions of the unem- 
ployed paraded New York. Soup-houses, for the gratuitous feed- 
ing of the starving poor, were opened in all parts of the city, as 
well as in the other cities of the Atlantic coast ; manufactures and 
agriculture were in a state of prolonged prostration, and at the 
outbreak of the war of the rebellion in 1861, as well as during 
most of the preceding seven years, there was neither gold nor 
silver anywhere to be had. Secretary Chase computed the total 
amount of both metals in the country, at the outbreak of the re- 
bellion, at not to exceed $50,000,000. The quantity coined had 
never gone into use, in the United States, except as a basis of re- 
demption for bank-notes, and through these had inflated bank 
discounts, deposits, and prices. Bearing in mind that the two 
years of financial crisis were 1837 and 1857, and that the premoni- 
tory symptoms of these two crises were an inflation in the circu- 
lation of bank-notes, and in the bank deposits and discounts, the 
relation between this cause and its effects will be plainly seen in 
the following table, prepared by the Secretary of the Treasury in 
his report for 1863 : * 

On or Deposits Circu- 

near and circu- lution 

janu- lation per per 

aryl. Circulation. Deposits. Specie. capita. capita. 

1834 194,8-10,000 $75,677.000 $11.83 $6.58 

1835 103,692,000 83,081,000... $43,937,000 12.61 7.00 

1836 140,301,000 115,104,000 40,019,000... 16.77 9.15 

1837 149,186,000 127,397,000 37,915,000 17.66... 9.52 

1838 116,139,000 84,691,000 35,184,000 12.46..! 7.21 

1839 135,171,000 90,240,000 45,132,000 13.59 8.15 

1840 107,000,000... ...75,696,000 33,105,000 10.70 6.26 

1841 107,290,000 64,890,000 34,813,000 9.79 6.10 

1842 83,734,000 62,408,000 28,440,000 8.07 4.02 

* With an addendum of the last column showing circulation per capita, by Mr. 
Weston, " Money," p. 195. 



^XPANSIOISr Aj^D PRIGElS. 



387 



On or 
near 
Janu- 
ary 1. Circulatimi. Deposits. Specie. 

1843 58,564,000 56.1t)8,000 33,000,000... 

1844 75,168,000 84,550,000 49.898,000 .. 

1845 89,608,000 88,031,000 44,241,000... 

1846 105,552,000 96,913,000 42,012,000... 



Deposits Circv- 

and circu- lation 

lalion jjer per 

capita. capita. 

... 6.15 3.14 

... i8.31 3.91 

... 8.96 4.52 

... 9.90 5.11 



1847 105,500,000 91,812,000 35,132,000 9.35 5.00 

1848 128,506'000 103,227,000 46,300,000 10.65 5.90 

1849 114,740,000 91,182,000.. 43,620,000 9.17 5.11 

1850 131,367,000 109,586,000 45,380,000 10.39 5.66 

1851 155,165,000 128,957,000 48,070,000 11.87 6.48 

1852 .... 13..31 

1853 146,072,000 145,553,000 47,338 000 13.66 .. 5.71 



1854 204,689,000 188,188,000. 

1855 187,000,000 190,400,000. 

1856 195,747,000 212,706,000 

1857 314,779,000 230,351,000. 



59.410,000 14.97 7.80 

53,944,000 13.95 6.92 

59,314,000 14,66 7.03 

.58,300,000 15.52 7.48 



1858 155,208,000 185,9.32,000 74,412,000 11.56 5.26 

1859 193,307,000 259,568,000 104,537,000 14.91 6.37 

1860 207,102,000 253,802,000 83,594,000 14.66 6.59 

1861 802,005,000 257,229,000 87,674,000 14.13 C.21 

In the same Treasury Eeport for 1863 are tables of the average 
wholesale prices, in the New York market, of ten articles (coffee, 
leather, molasses, mess pork, clieese, rice, sajt, sugar, tobacco, and 
wool), from 1834 to 1859, both inclusive. The following tables, 
also prepared, in part, by the Treasury Department, and in part by 
Mr. Weston,* show how closely an expansion in the volume of 
the circulation must be attended by an expansion in prices of 
commodities, and how the culmination of the two marks a finan- 
cial crisis. 



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Rise and Fall in Volume op Currency in Crises op 1837 and 1857, attended 
BY Like Rise and Fall in Prices of Ten Commodities. 



* Weston " On Money," p. 201. 



388 



ECONOMIC PHILOSOPHY. 







Circulation 






Circulation 




Average 


per capita, 




Average 


per capita. 


Year. 


of prices. 


January 1. 


Year. 


of prices. 


January 1. 


1834 


$19.13f 


$6.58 


1847 


$20.83i 


$5.00 


1835 


22.81i 


7.00 


1848 


16.531 


5.90 


1836 


29.46^ 


9.15 


1849 


16.45 


5.11 


1837 


28.404 


9.52 


1850 


16.20i 


5.66 


1838 


28.35f 


7.21 


1851 


19.421 


6.48 


1839 


22.21f 


8.15 


1852 


21.421 


No returns 


1840 


20.73i 


6.26 


1853 


22.47f 


5.71 


1841 


17.93f 


6.10 


1854 


20.84 


7.80 


1843 


13.80i 


4.62 


1855 


22.781 


6.93 


1843 


14. 82^ 


3.14 


1856 


25.071 


7.03 


1844 


14.65i 


3.91 


1857 


25.13J 


7.48 


1845 


18.56i 


4.53 


1858 


31.93 


5.36 


1846 


16.69 


5.11 


1859 


22.114 


6.37 



While the expansion in the volume of specie and credits, in 
England and in Europe, in 1851-7, was as great as in the United 
States, the collapse of credit in Eugland w^as less severe than in 
the United States. Indeed, the prevailing vievf , among American 
protectionists, is that the crisis vpas due in 1850-1 owing to the great 
advantages given to foreign over domestic competing productions 
by the low " Tariff for Revenue only " adopted under the lead of 
Robert J. Walker, in 1846. Under the operation of this "Free 
Trade Tariff," there was an excess of imports of merchandise over 
exports, and an export of gold and silver to pay for them, as 
follows : 



Year ending 


Excess of Imports over Ex- 


Excess of Exports over Im- 


June 30th. 


ports, Merchandise . 


ports of Gold and Silver. 


1848 


$10,448,129 


$ 9,481,332 


1849 


855,027 




1850 


29,133,800 


2,894,203 


1851 


21,856,170 


24,019,249 


1852 


40,456,167 


37,169,091 


1853 


00,287,983 


23,285,493 


1854 


60,663,479 


34,342,162 


1855 


38,899,205 


52,587,531 


1856 


29,212,887 


41,537,853 


1857 


54,604,583 
(Excess of importation of 
commodities.) 


56,675,133 


1858 


8,672,620 . 


33,358,651 


1859 


38,431,290 


56,675,123 


1860 


20,040,062 


33,358.651 


1861 


69,756,709 


56,453,623 



The great outflow of specie was made possible by the influx of 
new gold from California and Australia. But happening to 
occur so soon after the tariff of '46, it deferi-ed until 1857 a crisis 
due in 1851-3. 



BANK OF ENGLAND FINANCE. 389 

156. The Crisis of 1866. — Tooke and Miss Martineau, 
as historians of the panic of 1825, agree that the Bank of Eng- 
land's liberality in discounting bills stimulated the inflation which 
preceded the panic. 

In that of 1865, Mr. R. H. Patterson * is equally sure that the 
Bank of England virtually created the panic for its own profit, 
as well as reaped an enormous profit from it. The Act of 
1844 authorizes thn Rank of England to raise its rates of interest, 
at disci'etion, when there is a scarcity of money, and in suspend- 
ing that act it empowers the bank to issue notes in excess of the 
statutory limit, but does not oblige it to do so, and neither author- 
izes the other banks to issue notes nor to demand their issue by the 
Bank of England. That bank, though performing public func- 
tions, is still a private bank, and not a government bank, so far as 
the profit on its capital is concerned. 

The great fall in values and prices, which attended the close of 
the American war, had converted an extended line of securities, 
on which certain banking houses had loaned, into doubtful 
stoclvs. A feeling of distrust set in, relative to these houses, and 
the Bank of England, in the first week of October, raised its rate 
of discount from four and a half to seven per cent. The banking 
house of Overend, Gurney & Co. had held fi^om twelve millions 
to eighteen millions pounds sterling of deposits. A slow but per- 
sistent run on these had obliged it, at last, to ask assistance from 
the Bank of England on other than valid commercial secui'ities. 
The aid was refused. The firm failed, and the result showed it to 
be entirely rotten. One or two other banks failed in consequence. 
As the entire deposits of the kingdom, in all its banks, were £400,- 
000,000, and the amount of banking currency was only £40,000,- 
000, of which only half was available for paying them, the re- 
maining £20,000,000 would have to circulate very nimbly to 
suffice for the payment of twenty times its sum in deposits. 

Most of the depositors who withdi'ew from the other banks 
would transfer their deposits to the Bank of England. If the other 
banks suspended, the law transferred their deposits to the Bank 
of England, as custodian, until they were out of bankruptcy or 
chancery. Every failure of the other banks only added to the 
deposits, the coin, the discounts, and the business of the Bank of 
England. Hence, when the government, to arrest the panic, 
authorized the Bank to extend its issues, it chose to regard this 
as a privilege to itself, and not as a means of relief to the other 

* " Science of Finance," p. 231. 



Sgo ECONOMIC PIIILOSOPHT. 

banks. The profits of the bank rose to £975,655 for the half- 
year, of which £679,000 were earned during tlie fourteen weeks 
when its rate of discount was ten per cent. All this because the 
law enabled the Bank of England to issue all the notes it chose, 
to banks or merchants who applied to it as its own customers, 
but did not compel it to issue any notes whatever to banks which 
desired them for their own relief, and that of their depositors. 
The bank was thus enabled to break a number of the other banks 
which, until the act was suspended, could have broken the Bank 
of England by simply checking for their entire deposit.* 

157. The Crisis of 1873-9. — The revulsion of 1873 
in the United States is sometimes spoken of as a crisis, 
but it differs widely from any we have been considering, 
in the fact that it neither brought panic to the banks, nor 
bankruptcy to the merchants or manufacturers on any serious 
scale. It brought only a period of falling prices, extending 
over all sorts of commodities and continuing almost uninter- 
ruiDtedly for seven yeai's, with the effect of checking pro- 
duction and causing apprehension and great caution, with fre- 
quent closing of large factories and workshops, some suffering, 
and much agitation among wage- workers, followed by the for- 
mation of the most extensive and closely bound labor organiza- 
tions, some of them numbering their members by hundreds of 
thousands, and commanding large treasuries, with able officers, 
to whom were paid good salaries. In one sense, the fourteen 
years following 1873 have been a continued labor crisis, meaning 
thereby, not a period of starvation, or suffering, or extended fail- 
ure of employment, but rather of just enough closeness in busi- 
ness, and meagerness in pay, to keep working-men dissatisfied, 
while profits in many lines of industry seemed hardly to justify 
employers in keeping their establishments running. 

The causes were national, and grew out of a large contraction 
in the volume of transferable credits, occasioned partly by the 
policy of rapidly paying off the principal of the United States war 
debt, and partly by the fall in the value of silver relatively to 
gold, which set in in 1873, and culminated in the spring of 1876. 

The war for the suppression of attempted secession, in 1861 to 
1865, was fought out to its close with American capital. European 
bondholders, in the spring of 1865, had not been induced to 
lend the United States more than one-thirtieth as much as the 
Government had borrowed from its own people. 

* " Science of Finance," by R. H. Patterson, p. 223-347. 



A CONTRACTION CRISIS. 391 

With the advent of peace, a lively European demand set in. 
The bonds were exported, at the rate of from two to three hundred 
millions worth per year, until 1872. Dr. Edward Young esti" 
mates that in 1873-6 from twelve hundred to one thousand three 
hundred and fifty milhons of dollars' worth had gone abroad, and 
the portion lield at liome was narrowing down to the quantity 
needed by the national banks, as the basis of their note circula- 
tion. While these bonds were going abi'oad our balance of 
trade with Europe appeared as if heavily adverse to us, the fact 
being that our export of bonds was paying for our import of goods- 
Internationally, the bonds performed, for the time being, the 
function which gold, or other products, would have performed. 
They added to the buying capacity of the American people, 
to the extent of their face, and hence deferred the real 
period of payment of the very debt they represented. As between 
America and Europe, it was the incurment of a new loan, by the 
people of the latter to the people of the former, pari passu with 
the export of bonds. 

In 1873, the supply of bonds was exhausted. The borrowing 
resoui-ce, which had made the Amei'ican people appear so flush of 
money, for the eight years following so exhausting a war, was 
ended. It was now necessary to greatly restrict importation , 
and to pay for what we got, year by year, in goods or gold. So 
long as money was flush we could keep on building railways for 
the profit of contractors, though the prospect of paying returns 
from them might be ten years ahead. We had many enterpi'ises 
like this on hand, but the least needed of them all was Jay Cooke's 
Northern Pacific scheme. The crisis opened with the failure of 
Jay Cooke & Co., and collapse of the Northern Pacific, and con- 
tinued in a shaking out of value from what were called " watered 
railway stocks." Many of the railways were closely identified 
Avith the iron and steel manufacture, which had a chief hand in 
supplynig their tracks and rolling-stock. This greatly depressed 
prices, and the iron manufacture suffered, the consumption 
of pig-iron — which is the measure of the aggregate iron industry 
—falling off one-fourth, viz., from 2,500,000 tons in 1874 to 1,090,- 
000 tons in 1876, and the price of bar iron falling from $96 in Janu- 
ary, 1873, to |40 in Januaiy, 1879, or more than one-half. Such 
a decline in both production and prices marked many industries 
both in the United States and throughout Western Europe. The 
decline in prices extended so generally over all commodities, and, 
except w^here oscillations were occurring in modes of production, 



392 ECONOMIC PHILOSOPHY. 

or in the extent of the demand, it operated so evenly on all that 
Mr. Giffen, Mr. Goschen, and others of the best English economists 
held that it showed an advance in the purchasing power of 
money, equivalent to what would be produced by some extraor- 
dinary contraction in the volume of money. 

Meanwhile, the bonds which, until 1872, had been undergoing 
export were returning to America for payment, nearly as rapidly 
as they had been exported. The American people cared little for 
the economic effect of extinguishing this large issue of readily ex- 
changeable credit. They thought little of the question whether it 
amounted, in its effect upon prices and production, to that which 
would be produced by sinking $200,000,000 each year of coin into 
the Atlantic, or by extinguishing an equal quantity of Bank of 
England notes or consols. If a count of ayes and noes were 
taken, whether among the people, the statesmen of both political 
parties, or even the writers on finance, the very general verdict 
would be that the retirement of national debt of whatever mag- 
nitude, by payment, has no effect whatever on prices. The burn- 
ing of a few of the non-interest-bearing notes of the United States, 
when attempted by Secretary McCulloch in 1866, was promptly 
vetoed by Congress, because of the effect such a contraction was 
presumed to have upon prices. But the burning of two thousand 
millions of notes (bonds) of the same debtor, bearing interest, after 
they had staved off national distress for eight years, by their 
paying qualities in international trade, is set down as something 
that should not be discussed in any connection with prices what- 
ever. 

Bonds that bear interest, however, are, as between Europe and 
America, as ready a means of purchase as coin, bullion, or bills. 
Their issue is inflating to the money markets of the world, and 
has its effect on prices, as positively as if they were bank-bills. 
Their retirement and cancelment must therefore be a correspond- 
ing contraction of the price-making medium. Looked upon as a 
contraction in the volume of international means of payment, the 
retirement of the American debt, in the degree it has taken place 
since 1865, the whole of which has been felt since 1873, is of itself 
sufficient to account for the fall in prices, of all commodities, 
which has marked this period.*- 

* Mr. W. L. Fawcett in "Gold and Debt" describes tbe period from 1850 to 1859 as the 
Era of Gold, and estimates that prices of commodities generally were enhanced between 
1850 and 1854 by 45 per cent, but as the new gold supply declined in annual volume from 
1855 to 1800, commodities lost nearly half this rise, fallino; back to a scale of prices 25 



PAYING FOR IMPOBTS. 393 

158. TUe Balance of Trade. — The doctrine of the balance 
of trade after enjoying the highest repute for two centuries, 
has passed of late into some contempt, and is often treated 
as an exploded theory. The growth of wealth in a country, 
however, must be proportionate to the increased activity of 
its production and exchanges in every form. As these 
are eilected chiefly by the use of gold and silver, these two 
metals will move towards those countries whose rate of pro- 
duction is increasing, and from those whose rate of production is 
diminishing. If it appear that a country's exports of commodi- 
ties, of its own production, exceed its imports, it is to be inferred 
that other countries are becoming indebted to it, and must pay 
the debt, sooner or later, by shipments to it of the precious metals. 
Therefore, in the absence of other causes, an excess of exports 
over imports, and a resulting inflow into a country of the money 
of other countries, are to be deemed evidences of its pi'osperity. 
This doctrine was fairly stated by Lord Bacon, in 1615, as follows : 
" This realm is much enriched of late years by the trade of mer- 

per cent, above those of 1845. This was the effect, on prices, of increasing the stock of 
gold coin in the world, in thirtj'-five years, from 1477 millions of dollars to 2700 millions, 
or nearly doubling it. He describes the period from 1801 to 1876 as the Era of Debt , 
since the national debts of the world were increased in about this period from 9033 mil - 
lions to 33,439 millions, or Z% times ; the railway debts from 2,000 millions in 1860 to 5,000 
millioES in,1880, also2i^ times; and the municipal and state debts in the same proportion, 
This increase of debt was accompanied by increase in average prices of all commodities, 
of from 60 to 65 per cent, above those of 1845, thus giving the increase in debt an 
efficiency in making prices as great as that in gold. 

i/acieoc? (" Principles of Econ. Phil.," vol. i. p. 204) says: "Adopting this defini- 
tion, we may enumerate the different species of currency as follows: 

" 1. Coined money; gold, silver, and copper. 

" 2. The paper currency; i. e., promissory notes and bills of exchange, with all their 
varieties. 

"3. Simple debts of all sorts; such as credits in bankers' books, called deposits, book 
debts of traders, and private debts between individuals. 

" It is obvious that there is no distinction in principle between the two latter species. 
They each denote that a transfer of some sort has taken place, and are a title to future 
payment. As a matter of convenience some of these are recorded on pieces of paper. 
It is certainly true that some of these descriptions of currency are more eligible and 
secure than others, and perform the same duties with different degrees of advantage. 
The metallic currency rests upon the credit of the state, that it is of the proper weight 
and fineness, and the universal readiness of people to receive it in return for services. 
Paper currency, in this country at least, rests entirely upon private credit, and is of all 
degrees of security, from a Bank of England note down to a private I O U. These 
different species of currency, therefore, though they possess different degrees of cir- 
culating power, though they may be more or less eligible or secure, represent but one 
fundamental idea— Debt. From these considerations it follows that the amount of 
cvirrency, or circulating medium, in any country is the sum total of all the debts due 
to every individual in it.'" 



394 



ECONOMIG PHILOSOPHt. 



chandise which the English drive in foreign parts ; and, if it be 
wisely managed, it must of necessity very much increase the 
wealth thereof, care being taken that the exportation exceed in 
value the importation, for then the balance of trade must of ne- 
cessity be returned in coin or bullion. " That a country may, for 
a period of years, be consuming wealth beyond its rate of produc- 
tion, and hence running in debt to other countries, and that this 
process of running in debt will be indicated by an excess of im- 
ports over exports, and that for an ensuing period it will be as 
actively engaged in paying off its foreign debt, or recalling its 
bonds, and that this process will be indicated by an excess of ex- 
ports over imports, is clearly shown by the experience of the 
United States from 1865 to 1883. From 1865 to 1873 the United 
States was exporting its national bonds, and by the close of 1872 
it had sent abroad about $1,800,000,000 of its debt. In the ensu- 
ing years it was recalling this debt and paying it off. The result 
is seen in the following table, showing the excess of imports over 
exports in the first of these periods, and the excess of exports over 
imports in the second : 













Excess of 


Excess of 




Domestic 


Foreign 


Total 




Exports over 


Imports over 




Exports. . 


Exports. 


Exports. 
190,670,501 


Imports. 


Imports. 


Exports. 


1882 


179,644,024 


11,026,477 


189,356,677 


1,313,834 




1863 


186,003,912 


17,960,535 


203,964,447 


243,335,815 




39,371.368 


1864 


143,504,027 


15,333,961 


158,837,988 


316,447,283 




157,609,395 


1865 


136,940.248 


29,089,055 


166,029,303 


238,745,580 




72,716,277 


1866 


337,518,103 


11,341,430 


348.859,523 


434,813,066 




85,952,544 


1867 


279,786,809 


14,719,332 


294,506,141 


395,761,096 




101,254,955 


1868 


269,389,900 


12,563.999 


281,952,899 


357,436,440 




75,483,541 


1869 


275,166,697 


10,951,000 


286.117,697 


417,506,379 




131,388,682 


1670 


376,616,473 


16,155,295 


392,771,768 


435.958,408 




43,186 640 


1871 


428,398,908 


14,421,270 


442.820,178 


520,333,684 




77,403,506 


1873 


428,487,131 


15,690.455 


444,177,586 


636,595,077 




182,417,491 


1873 


505,033,439 


17,446.483 


522,479,922 


643,136.210 




110,656,288 


1874 


569,433,421 


16,849,619 


586,283,040 


567,406,343 


18,876,698 




1875 


499,284,100 


14,158,611 


513,442,711 


533,005,436 




19,563,735 


1876 


535,582,247 


14,802,434 


540,384,671 


460,741,190 


79,643,481 




1877 


589,670,224 


13,804,996 


602,475,230 


451.333,126 


151,153,094 




1878 


680,709,286 


14,156,498 


694,865,766 


437,051,532 


257,814,234 




1879 


698.340,790 


12,098,651 


710,439,441 


445,777,775 


264,661.666 




1880 


833,946,353 


11,692,305 


835,438,658 


667,954,746 


167,683,912 




1881 


883,925,947 


18,451,399 


902,377,346 


642,664,628 


259,712,718 




1882 


733,239,732 


17,302,.525 


750,543,257 


724,639,574 


25,903,683 




1883 


804,223,632 


19,615,770 


823,839,402 


723,180,914 


100,658,488 





159. Doctrine of Balance of Trade. — The doctrine of the 
balance of trade is still accepted as true among practical states- 
men and by judicious economists. Even McCulloch, in the ex- 
tracts cited concerning the crises of 1847 and 1857, virtually rec- 
ognizes it as the law governing both crises. Captious writers have 
made so much of certain qualifications of the doctrine as to assume 



THE USE OF CRISES. 395 

that they overthrow the original doctrine. In fact, they are in 
pei-fect harmony with it. For instance, a creditor country, like 
England, which is largely engaged in lending its capital on in- 
terest, in other countries, will become entitled, in payment of in- 
terest on these loans, to a large inflow of money, and it may 
choose to take this inflow in food and raw products instead of 
money. In this case, as the food and raw products imported ap- 
pear in its trade returns as imports of mei'chandise, and the capi- 
tals it loans do not appear as exports, there will be a continually 
increasing apparent balance of trade against it, where there would 
be none if the foreign loans of its capital were treated as an 
export of a commodity, which they certainly are. Hence this 
qualification is not a qualification or exception in principle to the 
doctrine of the balance of trade, but only a fact going to show 
that, owing to the failure of the trade i^eturns to include exports 
of capital among exports of commodities, the apparent evidences 
of the balance of trade, in great money-lending countries, is marred 
by an error of statistical omission, which needs to be supplied 
before attempting to state the true balance of trade. 

Again, where the money-lending country happens also to be 
the ship-owning and carrying country, it will be entitled to 
freights on the imports and exports of both countries. These 
freight earnings will lessen the quantity of domestic merchandise 
it needs to send abroad in order to balance its accounts with 
them, and hence, by lessening its necessary exports, will appear 
on the trade returns as increasing the excess of its imports over 
its exports, or the adverse balance in its trade. 

This, also, is evidently an error in its trade returns to show the 
true balance. In correction of this error, its annual exports need 
to be increased by its annual freight earnings, as these are, in 
eflPect, an export of services in carrying goods to the countries for 
and to which the carrying is done. With these corrections of the 
trade returns, and such others as may be necessary to bring them 
into conformity with the actual facts, the doctrine as stated by 
Bacon remains true. 

160. Are Crises Useful or Penal ?— Commercial and 
monetary crises perform, in certain ways, a useful function in 
industry, and tend ultimately to promote production, while at first 
discouraging it. They cori-ect a tendency of industry to continue 
in given channels after they have become unproductive, or less 
productive than those to which they need to be directed. 

The production of gold and silver, in increasing quantities, is at 



306 EGONOMIG PHILOSOPHY. 

all times, in one sense, one of the most profitable of industries. 
Yet it is easy to conceive that a sufficient force of the world's labor 
might be diverted from producing food, clothing, and shelter, to 
producing an increase in the volume of money, to have the effect 
of rendering money almost valueless and food, clothing, and 
shelter almost unpurchasable. The sevei'e crises which follow 
large additions to the volume of money of either kind, whether 
it be bank notes, as in 1837 in the United States, gold and notes, as 
in 1824 in England, and 1851-7 in America, or government debt, 
as in 1865-73 in the United States, are usually, and perhaps neces- 
sarily, followed by a diminution in the number of persons who 
seek to supply a circulating medium for commerce and an increase 
in the number who till the soil, spin, weave, dig ore, build houses, 
and provide food, clothing, and shelter. Commercial crises remit 
a people from an excessive manufacture of media of exchange, 
such as money, credit, means of transportation, ships, railroads, 
and the like, to a larger relative manufacture of products for 
exchange, whether cloth, corn, or iron. They rectify the steering 
of industry, which tends naturally to keep on forever, unless 
checked, in routines of profit-making which have for a time been 
profitable, but which become unprofitable to the world at large 
when persisted in too long. Commercial crises, in these instances, 
are a means of correcting undue persistence in the beaten ways 
.of industry, and of turning labor and capital into the new and 
unbeaten ways where they are more needed. Industry needs to 
be migratory in order to attain its highest evolution. It must 
carry the old pursuits, stock-raising, farming, lumbering, and 
housebuilding, to new countries, and carry them on under new 
conditions. It must carry them on in the old countries with new 
methods, processes, and machinery. It must discover new 
utilities in well-known substances, new economies in familiar 
callings, new plants and animals for the food of man, new soils 
for producing them, and new manures for restoring exhausted 
soils. So long as old industries, pursued in the old way, continue 
to be a means of certain livelihood to those engaged in them, the 
tendency of employers will be to meet that declining rate of 
profit, which attends the long-continued employment of capital in 
any one direction, by cutting down wages, rents, and interest. 
But this is to substitute parsimony, or meanness, for enterprise and 
migration. The interests of the woi'ld forbid it. A commercial 
crisis, sweeping all values away like a whirlwind, by making 
failure universal, prevents it from being mortifying or pax^alyzing. 



CBI8ES STEER TOWARD PROFITS. 397 

All couductors of industry and employers of labor, whose position 
is weak, ai*e weeded out and must look for " something new." In 
the universal search for "something new" those new industries 
are found and developed, in which society is chiefly interested 
because in tliem lie eventually the great profits and the great 
utilities. The crisis of 1816-19 in the South turned capital into 
the production of cotton, resulting in 1846, according to Dr. 
Carey's computation, in the production of six times as great a 
quantity of raw cotton for the same cost. The crisis of 1836-7 in 
America diverted vast quantities of capital and labor to the tillage 
of land in the Northwestern States. That of 1857 turned 
American capital away from shij^-owning to railway building, 
away from foreign transportation to domestic transportation, and 
resulted in the development in America of a railway system 
equal in mileage to that of all Europe. In some cases, as in that 
of Vanderbilt, the very men who had struggled against the 
'difiiculties of conducting a profitable carrying business at sea, 
found the same degree of enterprise and courage rewarded with 
overwhelming success when diverted to the development of the 
railroad system and internal commerce of the United States. 
That there was an immediate economic need of this diversion of 
capital, is shown by the fact that, from 1851 to 1860, the fortunes 
invested in trying to bring us into relations of close ti'ade depend- 
ence upon England, by fast steamer-lines and gi-eat importing- 
houses in New York, were all wrecked, shattered, or diverted to 
other channels, while from 1860 to 1880 those invested in develop- 
ing the internal trade between different portions of the United 
States by railway, and in evolving American industries in all 
forms, rose into commanding importance. 

In other, and perhaps the more numerous class of cases, com- 
mercial crises are the penalty for economic mismanagement, and 
generally on the part of government. The indirect good that 
may come of them, as some indirect good comes of all evil, 
should not blind us to the fact that they are, as a rule, the 
penalty of some untoward disaster to the currency, or of some sub- 
version of domestic by competing foreign industry. Sucli were 
the crises of 1817-19, 1833-37, 1857-1860 in the United States, 
and of 1834-6 and 1847 in England. 



CHAPTER XI. 

THE STATE. 

161. Government is Natural.— All mankind, like the higher 
animals, are endowed by nature with a desire for power, and a 
tendency to worship such powers as they suppose to be above their 
own power. The former induces them to lead, the latter makes it 
their pride to obey leaders whom, they feel to be stronger than 
themselves. By this conjunction of ambition and fear, the buffalo 
of the broadest shoulders and stoutest horns, or even the elephant 
of longest tusks and greatest sagacity, leads the herd. The wild 
goose of strongest wing guides the flock in its migrations, and 
the sparrows battle in the road-dust for leadership. In the 
human race the qualities which excel in fight — viz., courage, craft, 
cunning, and prompt assumption of responsibility, or readiness 
to usurp power, together with physical strength — are those which 
first promote to leadership. It is only when men are far advanced 
that eloquence, argument, public spirit, and later a sense of fair- 
ness and equity, begin to prevail. In the first instance, the 
governing class incur the danger and contests necessary to lift 
them to power, because they crave the power for the sake of the 
dignity and command over others which it brings. Later, this 
harsh selfishness of ambition is invested in politer forms, and is 
softened by public spirit and desire for the general welfare. It 
would not be safe to assume, however, that the dominant passion 
of ambition or love of power ever becomes, in fact, wholly sub- 
ordinated to unselfish aims, or that any system of society would 
be successful, if its success depends upon such a subordination of 
ambition. The statesman calculates upon the perpetuity of the 
fundamental and basic passions of human nature, such as the 
love of power, of freedom, of life, of property, of law, of sex, of , 
religion, of art, of beauty, and of society, as being constant and 
nearly unchangeable factors, with which government must deal, 
and whose existence it must assume, as the chemist assumes his 
simple substances, or as geometry assumes the three dimensions. 
Grovernment exists, therefore, because man is, by virtue of his 



G VERNMENT B Y INTEREST. 399 

iuliereiit structure, a governing' and obeying creature, in the same 
sense as life exists, because he is a breathing creatiu'e, and as 
pleasui-e and pain exist because he is a sentient creature. We 
could as easily" think of man without sensation, or without 
breath, as without government. Nature, in constituting man, 
kindly ordains that the functions of life which are essential to his 
existence, shall not be subject to his will in any degree. These 
are the circulation of his blood, the digestion of his food, the 
transmission of his sensations, and the reaction of his passions of 
anger and resistance against those forces which threaten his life. 
Above these are a class of functions which can, in a partial 
degree, be left to his choice, but concerning which he is nerved 
to action by forces so predominating as to be but partially repres- 
sible factors in conti-olliug his will, leaving him a measure of 
choice as to means, opportunities, and occasions, but binding him 
by the strongest ties of emotion to the general result. These are 
the maintenance of the family, the reproduction of his kind, the 
accumulation of property, and the appropriation of land. In 
relation to these duties man occupies an intermediate position 
between choice and necessity, or between judgment and instinct. 
He is permitted, as a race, no choice as to the general result, but 
is permitted, as an individual, to believe in his freedom as to 
means and occasions. Midway between the first and second class 
of functions is that of government. It is somewhat more con- 
sciously voluntary than the circulation of the blood or digestion, 
but it is far less so than industry or reproduction. 

162. Interest Organizes Industry. — In the broadest sense, 
man in society may be said always to be under two forms of 
government, one of which, though involuntary in its origin, is 
conscious in its action, and this is that which is ordinax'ily called 
government, or the state. The other is a far more perfect and 
searching mode of government than the state, being that govern- 
ment of interest, inherent in human nature, arising ui the desire 
to acquire property, which places mankind in the several relations 
to each other, of merchant and customer, employer and employee, 
seller and buyer, landlord and tenant, borrower and lender, the 
aggregate of wliich relations constitutes the organization of modern 
industrial society through capital. Industry, or business, is not 
ordinarily treated, or recognized, as a mode of government, because 
it is an unconscious government. The men who take part in it 
do not consciously intend to govern or to be governed. Tliey in- 
tend, each and all, only to benefit, each man himself, and those 



400 ECONOMIC PHILOSOPHT. 

immediately dependent on him. But the whole operates thx^ougli 
the instinct of gain to effect a thorough, though unconscious, 
organization of society, in which each is assigned to the work he 
shows himself most nearly competent to do, is rewarded 
according to the value of his service to society, and is promoted 
according to his skill. In it promotion in command depends on 
economy in expenditure, sagacity in investment, and activity in 
promoting production. That it is a mode of service is shown by 
the ordinary phrases : ' ' The merchant's success depends on the 
assiduity with which he serves his customers." "The manufac- 
turer must be quick to perceive changes in the public taste and 
comply with the public demand." " The borrower is servant to 
the lender." Those who would secure employment and thrift, in 
serving the powerful, must defer or bend in judgment to those 
they purport to serve, as neither the powerful nor the weak can 
make any trustworthy use of the services of one who substitutes 
his own judgment, or lack of judgment, for that of his employer. 
This rule is expressed in the mottoes, " Obey orders if you break 
owners "; " Hew to the line, let the chips fall where they may," 
etc. The same social action is subject to be described either in 
terms of praise or dispraise, according to the momentary bias of 
the describer. Thus Shakespeare at one time sneers at subser- 
viency, in words of dispraise. It 

" — Crooks the pregnant hinges of the knee 
That thrift may follow fawning." 

At another he describes the opposite feeling of pride, which will 
not defer as a 

" Vaulting ambition doth o'erleap itself, 
And fall on 'tother— " 

Merchants, accepting the services of clerks, require that they shall 
be "of good address and possessed of tact," meaning thereby the 
faculty of discovering adroitly, and serving readily, the wants of 
those seeking to buy. Society, outside the family, is thus welded 
together by links of reciprocal interest, and mutual service, into an 
ox^ganized body, having far more than the efficiency of an army, 
in accomplishing the daily miracle of equal, or nearly equal, 
universal supply of the necessaries required for human consump- 
tion. That this unconscious form of government, through in- 
dustry or business, is more searching and pervasive in its influence 
over human conduct, than the conscious government which we 
call the state, is shown by the fact that the majority of men are 



WANT AND wealth: 401 

seldom brought into contact with the state in any manner. It is 
only as they pay taxes, vote, sue, or are sued in the courts of law, 
are punished for some crime, sit as jurors or hold an office, that they 
are reminded of, or in any way governed by, the state. But every 
time they do any act, for hire or profit, buy, sell, or produce, 
contract or discharge, earn or pay any thing, indeed every move 
they make to better their lot, or increase their means of living, is 
an act of association or commerce with their fellow-men, whereby 
they, by an instinct of which they are themselves unconscious, 
become links, cogs, wlieels, weights, pulleys, or pivots in the 
social mechanism commonly called industry or business, the 
aggregate effect of which is to compel each to work for all, and 
all for each, in mutual helpfulness. 

163. The Motive Force in Industry. — The government, 
which is effected through industry, knows of but one form of 
coercion or punishment, viz., want. Tlais spectre, stalking behind 
and stimulating all men to energy, can be laid only by one exor- 
cism, viz., wealth, which is, in all cases, labor performed. 

Between these two natural inducements, want and wealth, the 
human soul swings like a pendulum, in all its efforts. These 
driving forces impel man on his career, being, in economics, ex- 
actly what ignorance and wisdom are in thought, what right and 
wrong are in ethics, what hope and fear are in emotion, what 
pleasure and pain are in sensation, and what time and space are 
in being, viz., the ultimate or first principles which must be 
assumed to exist before we can think of economics, ethics, thought, 
emotion, sensation or being, as having any existence. Nor is any 
one form of the state necessarily more favorable than another, 
to the promotion of Industry. In the domain of economics, the 
state is regarded as the product of the social conditions in 
which it arises, although, upon being ci'eated, it has also vast 
power to change and improve social conditions, for those 
who are to come. It may be likened to an individual. Every 
man is, in one sense, produced or caused to be what he is, by 
his environment, i. e., his parentage, race, health, sex, place 
of birth, education, etc. But, being so pi'oduced, he becomes an 
efficient actor in controlling the conditions into which future 
generations are to be born. So a state is wliat its antecedents in 
history make it, but it is the author of its own consequents, and 
to this extent, while previous history^makes it, it makes_subsequent 
history. 

The causes of the constitution of a state, thei-efore, must be 



402 ECONOMIC PHILOSOPHY. 

sought in the material conditions of its people. If their posses- 
sions are both equal in distribution, and small in value, as among 
the North American Indians, and especially if their land be held 
in common, their mode of government will be that of a democratic 
tribe, choosing their chief, debating as equals, but as savages. If 
their properties are more considerable, and still equal, they will be 
a democratic state like Sparta, or if like the Spartans arid Athenians 
they own slaves, the state will still be democratic as to the free 
citizens, and aristocratic as to the slaves, as was Sparta. The 
ownership of equal properties by the citizens of a state will, in 
turn, usually spring from certain race peculiarities, such as were 
possessed by the Greeks and early Romans, such as bravery in the 
contest for personal rights, monogamy, tlie inviolability of the 
family relation, and the mountainous and easily defensible condi- 
tion of the country, a diet of meat, mixed foods, and wines on the 
part of the people, a moderately fertile soil, such an access to rivers 
or the sea as favors commerce, and such a variability of climate 
as makes forethought necessary to existence. A pojoulation of 
industrial, physical, and mental equals, like that of Switzerland, 
develop into a democracy in government. If they acquire 
wealth, like Athens, the democracy becomes aesthetic, poetic, 
philosophic, artistic. If they remain poor, like the Spartans, 
the government becomes heroic, truculent, barren in art, and 
warlike. 

Deprived of the stimulus of a changeable climate, as is China, 
which is shut in on the north by great ranges of mountains, and 
left open to the southward, a people will accept a vegetarian diet, 
will abhor innovation, and will shirk all contest, change, and 
revolution, — hence will come under a bureaucratic, paternal 
despotism. If, as in Tartary, the climate be severely changeable, 
the people will be wandering, nomadic, and tribal. A permanent 
subdivision of the land into large estates gives rise to a nobility 
and the union of the church with the state helps still more to 
render the government aristocratic. Activity in manufactures 
and commerce causes money to be a potent factor in government, 
and eloquence to decline. In the infancy of society, power is apt to 
be in either the soldiers or the priesthood. Later on it is in the sol- 
diers and lawyers. As suffrage extends to the masses of the people 
it passes to those who are apt popular orators or political leaders. 
Among these the great capitalists and coi'porations often buy their 
way to power. Rome, and probably Egypt, reached this stage 
shortly before either passed by conquest under barbarian sway. 



GOVERNMENT BY PARTIES. 403 

Hence governments grow out of social and material conditions. 
That form wliieli to one people will be spontaneous and inevit- 
able, to another would be unnatural and impossible. 

164. Forms of Goveruuieut Depend on the Evolution 
of Occupations. — Each form of government being the out. 
growth of the conditions under which it comes into existence, the 
presumption for all practical pui'poses is that each government is 
that which is best adapted to its own people, at the time and un- 
der the conditions in which it arises. But, under every govern- 
ment, there is a majority, to whom the govei^nment may seem to be 
the best possible, and a minority, whomay prefer another, or think 
it even the worst possible. The question, which painty has the ma- 
jority, is detei'mined, in ruder times, by conspiring and fighting, 
and in moi-e republican periods, by debating and voting. Under 
either system, the change of a small number of influential persons 
may change the majority into a minority, and thus effect a change 
of government. The inference that each government is, for the 
time being, the one which is best adapted to the welfare of its 
own people, is subject therefore to a degree of doubt proportionate 
to the numerical strength and intensity of dissatisfaction of the 
minority, and the probability that the minority will, at any time, 
obtain the ascendency. 

To-day a secular, anti-clerical republic exists in France. It 
confiscates the prerogatives, and, in a degree, the property, of the 
chui'ch, and limits and curtails the power of the priests and 
religious orders. Its strength lies in the fact that it represents 
the banking, manufacturing, and business men, or bourgeoisie, of 
France, and therefore its material interests. Against these are 
arrayed the Catholic or ultramontane party, which includes the 
priesthood, peasantry, or small farmers, and the Bonapartists 
and Bourbonists. It rests on the still surviving strength of those 
elements of rank, loyalty, moral conservatism, and social fealty 
which once organized society, almost without the help of money, 
or commercial motives, but which now are inferior to these more 
modern social forces. At present the Republic affords the pre- 
sumption that it is the best government which France admits of, 
by being in power, and controlling an effective majority. It is, at 
all times, possible that the numbers opposing it exceed the numbers 
favoring it. Should it go out of power, in behalf of a government 
composed of the elements which now oppose it, the like presump- 
tion would immediately attach to its successor, subject, like the 
present government, to a doubt proportioned to tlie numerical, 



404 ECONOMIC PHILOSOPHY. 

intellectual, economic, and military streng-th of the elements of 
that party which is now in power, but would then be out of 
power. 

All governments, even the most imperial, hereditary, or des- 
potic, are created and maintained by parties, but, in periods of 
military force, the co-existence of the minority party is a sup- 
pressed fact. However despotic the form, and however military 
force may be necessary to maintain and change it, the utmost that 
any government can obtain is a party, or section, of the people, 
in its favor. Russia, under the czars, is governed by a Pan-Slavist 
party, and this government is opposed by the races which do not 
like the ascendency of the Slavs, aiid also by the Nihilists. 
China has been governed, for centuries, by a Tartar party. Italy 
is governed by a party favoring a kingdom distinct from the 
papacy, and resisted by a party desiring no king but the Pope. 

The persons who come into prominence as czars, kings, em- 
perors, csesars, popes, presidents, or governoj^s, legislators and 
notables, can not escape being the representatives of majority 
parties, compelled to suppress, by coercion, any minority party 
that may oppose them, by methods in conflict with the funda- 
mental law, or constitution, of the country. 

All countries have a fundamental law, or constitution, or body 
of ancient customs, in professed subordination to which the mon- 
arch, executive, and other officials for the time being, hold power. 

In countries which have no written constitution, there are the 
ancient customs and usages of the realm. Every monarch enters 
upon his duties by promising, in some religious fox'ui, to protect, 
defend, and obey these ancient usages, customs, and laws. 

165. Governments Classified. — A government, whose 
administrators can be changed only by fighting, may be classed 
as despotic. One whose officers can 1)6 changed by voting, or 
the ballot, may be classed as popular, or free. 

Governments are frequently classified as Monarchical, Aristo- 
cratic, Bureaucratic, Hereditazy, Imperial, Kingly, Parlia- 
mentary, Republican, Repi^esentative, Democratic, and Respon- 
sible. 

These are useful names, but are liable to vary greatly in the 
essence, or meaning, they are made to cover. In Ancient Rome, 
under thoroughly Republican names, csesars and tyrants became 
dictators. On the other hand, under monarchical forms, as in 
modern Great Britain, a comparatively perfect liberty of chang- 
ing the government by ballot may come to exist. Pope's couplet, 



MODES OF RULE. 405 

" For forms of government let fools contest, 
That which is best administered is best," 

to express the American view, should be so modified as to read : 

*' For forms of government the wise contest, 
Since that wherein the people rule is best." 

The experience of republics, and especially of America, has 
probably served to satisfy many persons, though not a majority, 
that the pi'erogatives of government may, in some subordinate 
localities, be devolved on persons who will make so bad a use of 
them as to bi-iug limited examples of free government, at least in 
great cities, into unfavorable contrast with the governments of 
other cities which are presumed to be less free. There is strong 
ground to claim that London, Paris, Berlin, Madrid, Rome, 
Vienna, and St. Petersburg have better municipal governments 
than New York, Philadelphia, Buffalo, Chicago, and San Fran- 
cisco. There is also ground to claim, however, that this is in part 
owing to the more rapid growth of the American cities, in wealth, 
and the more unstable and shifting character of their population. 
If so, it is believed that it may be corrected in time. 

The concentration of all the elements of rule in one person 
constitutes monarchy. Usually, it is accompanied by the principle 
of the hereditary transmission of this authority to the heir ; but 
in exceptional cases, like that of the Pope of Rome, the King of 
Poland, and a few others, the transmission has been by election. 

An aristocracy occurs wherever a small number of persons or 
families, by reason of wealth, of inherited rank which originally 
implied wealth, or by military services and rank, or priestly 
power, or learning, or other personal quality, obtain as a class an 
ascendency in the State, which mere numbers can not, by voting, 
ovei'come. As the word aristocracy means a government by the 
best men, and those who oppose aristocracies always deny that 
they are composed of, or result in, the selection of the best men, 
the woi'ds " oligarchy," meaning government by a few, and " plu- 
tocracy," meaning government hj the rich, have been, by those 
opposing them, substituted for the word aristocracy, to avoid this 
implication. 

Athens and Sparta were aristocratic, as respected the relations 
of the citizens to the helots. Hence Aristotle's work upon econom- 
ics and politics breathes tln'oughout a most aristocratic spirit. 
Aristocracy has been a strongly molding principle in all the 
governments of modern Europe, and in the Republic and Empire 



406 ~ UCONOMIO PHILOSOPHY. 

of Rome, from which they are, in great part, derived. In England 
the nobility and land-owning gentry represent the aristocratic 
spirit, and have usually furnished the entire House of Lords, two- 
thirds of the members of the House of Commons, a large portion 
of the officers of the army, the church, and the civil service, be- 
sides contributmg, in more than their numerical proportion, to 
the bar, the bench, and the literature of the country. "Bureau- 
cratic" government is an irregular word in formation, since it 
is compounded of a French word with a Greek, but convenient in 
use to express a government by a monarch, through adminis- 
trative officers only, without a parliament, or national deliberative 
assembly, as in Russia. Sometimes, as in Germany, it indicates 
that the function of the parliament is advisory merely, and that 
the monarch, through his administrative bureaus, can, if he 
chooses, govern without a parliament. Bureaucracy signifies 
much the same as absolutism, except that absolutism relates to 
the principle or the effect, while bureaucracy defines the means 
employed to render the monarch absolute, viz., the bureaus or 
departments, or subalterns of the executive. The bureaus, or 
departments, correspond to what in America would be called the 
cabinet, the civil service, or postmasters, revenue collectors, mar- 
shals, etc., and the judges. Hence, in a bureaucracy, the mon- 
arch dispenses with the guidance of a parliament, or legislature, 
by substituting for it the advice of his counsellors and officers of 
every grade, civil, military, and religious. 

166. Parliamentary and Representative States. — 
Parliamentary government is government by a deliberative body, 
or a government wherein the nominal monarch is under a con- 
stitutional obligation to defer to, and obey, the will of the national 
legislature. England, Italy, Spain, Austro-Hungary, Greece, and 
Servia are parliamentaiy governments. Germany is parliamen- 
tary in a proximate degree, but its present monarch denies that 
he is bound to obey parliament any farther than he believes its 
laws to be right, and consistent with public safety. 

Parliamentary government is also essentially identical with 
responsible government, though the latter relates to the position 
in which the ministry is placed under the system, while the 
former expresses the supremacy it imparts to the legislature. 

Responsible government is the system wherein constitutional 
advisei's of the crown, usually styled his ministers, heads of de- 
partments, or cabinet, are required to obey the dictation of the 
national legislature. The mode in which this is effected is by re- 



RESPONSIBLE RULE. 407 

garding them as having advised every act of legislation proposed 
by the crown, and every administrative policy or order adopted 
by it ; and by holding them obliged in honor to resign, if an ad- 
verse vote is given, against such a measure, in the popular branch 
of parliament. The ministry, however, instead of resigning, may 
dissolve pai'liament, which is called appealing to the country. In 
the new election of members of j)arliament, which is then held, 
the people are supposed to vote for members who will either 
agree with the previous action of the ministers, or with the pre- 
vious action of parliament. If the new parliament agrees with 
the previous action of the ministers, they remain in office, as 
legislation can then move on in hai'mony. . The bill, which the 
previous parliament voted down, will then pass. If, on the con- 
trary, the new parliament agrees with the previous parliament 
the ministers will resign, and the monarch will be called upon to 
select a new ministry, in harmony with the views of the two suc- 
cessive parliaments. Hence, under the responsible system, the veto 
power of the monarch becomes obsolete, and parliament becomes 
supreme. The governments which embody the responsible sys- 
tem are: England, in which it originated; all the English 
colonies which have legislatures, except West Australia; the 
French Republic, the Empire of Austro-Hungary, Italy, Spain, 
Servia, Greece, Belgium, Holland, and Denmark. It is equally 
applicable to republics, monarchies, aristocracies, democracies, 
and empires. It had not taken form, in England, at the date of 
the separation of the United States from England, and was not 
therefore known, or discussed, by those statesmen who framed the 
American constitutions, state and federal. 

Its originating germs are to be found in the execution of Charles 
I., in the supersedure of James II. and election of William of 
Orange, and in the various constitutional laws settling the suc- 
cession to the crown, and prescribing the qualifications and con- 
ditions on which it may be held. The doctrine that the throne is 
bound to obey the House of Commons, either as it now is (when 
a question arises) or as it shall be after one election has tested the 
popular will on that question, has grown up so mysteriously that 
it'is difficult to find a date for its origin. It is the exterior sign of 
the evolution of England from the military through the aristo- 
cratic into a commercial state. The kingly office originates in and 
is vital during the military stage. Of dukes, marquises, earls, 
counts, viscounts, barons, and knights, all are military titles, and 
reflect the military life, except earls and barons. It is because the 



408 ECONOMIC PHIL080PHT. 

House of Commons reflects business, commerce, and profit tliat 
it existed only bj sufferance in the military period, but leaves the 
throne to exist by sufferance in this modem life. We find George 
III., in 1782-83, refusing to retire Lord North's ministry, which 
had led the war for the subjugation of America, and accepting the 
new Shelburne ministry, in which Pitt and Fox, the champions 
of American independence, were to be leading spirits. He declared 
frequently that his honor demanded that he should abandon the 
throne and return to Hanover, rather than submit to the aggres- 
sions of the Commons. A royal yacht was actually summoned, 
and was several times in waiting to bear him away. In time he 
yielded, content to gscape the threatened necessity of having Fox 
himself, whom he chiefly hated, as premier. So comparatively 
modern, however, is the blunt statement of the doctrine that the 
king is subordinate to the Commons, that there seemed a flavor of 
radicalism in the exclamation of Mr. Roebuck in 1858 : " The 
crown, it is the House of Commons ! " The growth of the House 
of Commons itself is as gradual as is the rise of England's indus- 
tries. Under the Saxon constitution (to 1060) there was no House 
of Commons. The Witenagemot * included in a crude way the 
rudiments of a council of state, a court of justice, and a house of 
lords, but with the informality of a town meeting. It was more 
like the consultation of an Indian chief with his braves, or of 
the leader of a hunt with his associates in the chase. Prof. Free- 
man holds that it was a council of all who chose to attend, and 
that the present House of Lords is the regular successor of the 
early mass conventions of the people, irrespective of rank, reduced 
to paucity of numbers only by the inability and disinclination of 
the poorer classes to sustain the expense of attending. Guizot f 
holds that at first the clergy, nobles, county knights, and burgh- 
ers each sat or met by itself, and voted by itself in contributing 
taxes, one voting perhaps a tenth, another an eighth, or other 
proportion. Prof. Freeman's theory seems at war with the rule 
that the more barbarous and military the epoch, the more mon- 
archical or aristocratic is usually the organization of society. 
Local magistrates and county knights may have occasionally sat 
in the same body as the lords, but the evidences are rather that 
as early as they sat at all they sat separately both from the lords 
and from each other, as a petitioning or complaining body, while 
the lords were a consulting body. In 1265, fifty years after Magna 

* See E . A. Freeman in International Beviev) for November, 1876. 
t On " Representative Government." 



RESPONSIBLE GOVERNMENT. 409 

Charta, borough representation was first actually witnessed. A 
century later the House of Commons was strong enough to com- 
plain of the king's ministers, and, for the first time, to exercise 
its power of impeachment. Hallam declares that at the close of 
the fourteenth ceutury their consent was necessary to the levy of 
money taxes, and to the enactment of laws, and that they had 
frequently exercised the power of inspecting and controlling the 
administration of government. From this period to the present 
the king's ministers have been complained of by the House of 
Commons, at first very meekly and humbly, as an oi)j)ressed ten- 
ant might complain to his lord of a despotic or hard steward, but 
in due time grown stronger, through impeachments and execu- 
tions, until finally their slightest dissatisfaction with a minister 
has come to be politely deferred to, through resignations. Yet, 
down to the reign of Henry V. (1413) the House of Commons, in 
form, merely petitioned. * The king enacted, with the advice and 
consent of his lords. An impeachment was in form only the 
humble petition of the Commons that the king's evil advisers 
might be arraigned and tried before the Lords. Thus gradually 
the ministers passed, by a transition which extended over 600 
years, from being favorites and lackeys of an absolute monarch, 
whom they could advise only because they pleased him, into 
rulers selected by the House of Commons to do the actual work of 
governing, while the king merely reigned. 

The responsibility, which began as an individual one on the part 
of each minister, began to be a collective responsibility on the 
part of " the ministry " after the revolution of 1688. A century 
earlier Queen Mary had thought it no infraction of the constitu- 
tion to dissolve several successive parliaments, with the view of 
getting one subservient to her wishes. Since the accession of 
William of Orange, and especially since the failure of the last 
"personal" reign, that of George III., in the matter of America, 
the theory that the king must have no personal policy, but that 
the House of Commons must fix the policy of the king, has slowly 
ripened into constitutional law. Sir William Blackstone, writing 
exhaustively upon all the tassels and tinsel of royalty in the four- 
teenth to eighteenth years of the reign of George HI. (1774-8), 
wholly fails to detect the doctrine. Alexander Hamilton, in the 
sixty-ninth letter in The Federalist, would have stated the doc- 
trine with judicial fairness if he had ever heard of it. But lie 

* Guizot ou Representative Government, pp. 4C6, 467, 482, 507, 513, 517. 



410 ECONOMIC PHILOSOPHY. 

says that the king's veto was then in disuse only because the 
crown had. found it more easy to control parliament by its arts 
than by its prerogative.* Blackstone may have ignored the doc- 
trine through toryism, and Hamilton may have written sarcas- 
tically ; but there is haixlly any evidence that, in their period, 
this had yet become even a tenet of Whig politics, still less that 
it was an accepted doctrine of the English constitution. History 
must, therefore, award chiefly to Queen Victoria's reign the credit 
of having first displayed the conscientious and admirable non- 
partisanship which was necessary to engraft this principle firmly 
into the British constitution. The queen has done this without 
seeking to influence personally either the popular elections, by 
which the complexion of the House should be determined, or 
the course of discussion by which its majorities should be 
controlled. 

The English ministry at present consists of thirty-one per- 
sons, of whom from eleven to sixteen form the cabinet, the 
others being usually heads of bureaus, but not consulting offi- 
cers of the crown. The cabinet includes the first lord of the 
treasury, chancellor of the exchequer, lord chancellor, president 
of the council, lord privy seal, secretaries of state for the home 
department, for foreign affairs, for the colonies, for war, and for 
India, first lord of the admiralty, first commissioner of works, 
chief secretary for Ireland, and generally also the president of the 
local government board, vice-president of the education commit- 
tee of the privy council, and the chancellor of the Duchy of Lan- 
caster. The actual executive officers who administer the govern- 
ment are known as " ministers with a portfolio," i. e., having the 
responsible headship of a department, and are cabinet mem- 
bers. The selection of the cabinet from among the ministers is 
not always the same. Generally the premier has been the first 
lord of the treasury, sometimes the chancellor of the exchequer, 
sometimes both ; and sometimes, as in the case of William Pitt, 
a secretary of state. 

Tlie crown, through its ministry, takes the initiative usually in 

* In Letter LXIX. of The Federalist, Alexander Hamilton says : 
" The King of Great Britain, on his part, has an absolute negative upon the acts of 
the two houses of parliament. The disuse of that power for a considerable time past 
does not affect the reality of its existence, and is to be ascribed wholly to the crown 
having found the means of substituting influence for authority, or the art of gaining; 
a majority in one or the other of the two houses, for the necessit}"^ of exerting a 
prerogative, which could seldom he exerted without hazarding some degree of 
rational agitation." 



LEGISLATION IN ENGLAND. 411 

legislation, preparing, proposing, and defending in parliament 
the bills and measures on which it stakes its success as an admin- 
istration. So long as these measures are concurred in by the last 
elected House, they are presumed to accord with the will of the 
voting constituency. For securing harmony toward the minis- 
terial measures, certain members of the ministry need to have 
seats in the House of Commons ; as these do not accrue to them 
by virtue of their selection as ministers, they must be elected by 
some constituency to a seat in the House. 

A member of the British cabinet is usually also a member of 
the House of Lords or House of Commons, the latter being in 
modei'n times the more effective position ; he is also a member of 
the queen's privy council, a somewhat indefinite body of eminent 
persons, including many not in the cabinet or ministry. It is 
somewhat as if the President of the United States should, by 
usage, select his cabinet from among the more prominent mem- 
bers of the Senate and House, these members combining to per- 
form their representative functions in addition to their cabinet 
duties. The chief legislative duty of the leading cabinet officers, 
after devising measures for the consideration of parliament, is to 
defend these measures on the floor of either house. The chief 
duty of the leaders of the opposition is to carefully avoid opposing 
a government measure otherwise than by criticism of its details, 
unless they have something better and more in harmony with the 
public will to propose. This insures that habitual moderation, 
caution, and candor which distinguish English speeches in par- 
liament. They seem inferior to American speeches in statistical 
and legal acquirement, are less patriotic, and get down less fre- 
quently to bases of fundamental right and equity. But they are 
more guarded, discreet, and, as a rule, politic, and rest their 
case on expediency and exigency more than on principle. 

When the wary and prudent leader of the opposition sees his 
antagonist adopt a policy on which he thinks he can be over- 
thrown, first in the House of Commons, and then, if necessary, 
before the people, he attacks the offending measure, and the 
struggle in debate is not for the empty applause of the gallei'ies, 
but for the control of the government. Each party puts forward 
its most powerful yet most judicious combatants. It is not a set 
speech or lecture, to be followed by handshakings of friends, 
printed and sent to one's constituents, and that is all. If success- 
ful it means a change of office and policy, and almost of necessity 
that the critic will succeed in office the statesman he is criticisr 



412 ECONOMIC PHILOSOPHY. 

ing. Such a struggle sorts men and develops statesmen, by an 
analysis far finer than any that can be made by any politicians in 
national conventions, or by any voters at the polls. The man it 
brings forward is, however, a great debater chiefly. It is worthy 
of note that great debaters are seldom regarded as the best admin- 
istrators. 

A government in which all power is conferred, either immedi- 
ately or ultimately, by election or choice of the people, or of the 
majority of military force of the people, and no part of it by in- 
heritance, purchase, or direct military force, is a republic. If the 
people elect a legislature, which enacts la\YS by virtue of the 
power thus delegated, as in the United States, it is a representa- 
tive republic. The parliament of Great Britain is also a repre- 
sentative legislature, as respects its House of Commons. In the 
Roman republic, however, the representative j)rinciple did not 
exist. The people voted directly for their officers, and upon all 
statutes, or leges, submitted to them, according to one or the other 
of three modes of mustering or grouping, in one of which the 
power was chiefly in the patricians,* in another of which it was 
chiefly in the wealthy and the army,t and in the third of which 
it was in the plebeians or commonalty. J 

These modes of voting distinguished respectively the infancy, 
the ascendency and the decay of the state. In the earliest mode, 
known as the Comitia Cur lata, only the patricians or aristocracy 
voted, but the vote of one patrician was equal to that of another, 
as in the British House of Lords. From that, Rome passed to 
the more complex vote by centuries, known as the Comitia Cen- 
turiata. The people were divided at the census into six classes, 
according to their wealth. As the purchasing power of Roman 
money can not be accurately expressed in modern money, it may 
be proximately accui'ate to say that all worth upwards of $1,000,- 
000 wei'e in the flrst class, and had thirty -five parts in a hundred 
of the voting power of the state, and furnished thirty-five hun- 
dredths of the army and the treasury. Those worth less than 
$1,000,000, and more than $500,000, were in the second class, and 
furnished one-quarter of the army and of the reveime, and en- 
joyed one-quarter of the voting power. An absolute union of the 
first and second classes, therefore, could carry any measure, and 
the vote of the other classes needed not to be taken. If, however, 
a vote of the first and second classes failed to exhibit a majority 

* Comitia Curiata. + Comitia Centuriata. J Comitia Tributa. 



BESPONSIBLE GOVERNMENT. 413 

of the whole, then the third class, worth say $100,000, or the 
fourth, worth $50,000, or the fifth, worth $10,000, or the sixth, 
worth $500, would be consulted. In practice, the $500 class was 
seldom consulted. 

Taxation and representation were bi'ought into their logical 
coherency in a masterly way in this Roman system of voting by 
centuries. The right to cast a certain voting power grew out 
of the possession of a corresponding amount of assessed capital, 
and carried with it inseparably the obligation to contribute a 
corresponding ratio of the army and the revenue. This identity 
of taxation and representation did much toward advancing Rome 
to be the ruler of the world. 

The third system of voting, known as voting by tribes, or 
Coniitia Tributa, admitted the plebeians, freedmen, aliens, and 
non property-holders to vote on an equality with the aristocracy, 
whereupon, of course, the aristocracy stopped voting altogether, 
and the Roman mob became the saddle on which the Caesars rode 
into power. Universal suffrage, divested of the counteracting 
influence of capital, became the stepping-stone to the complete 
abolition of all suffrage, first in value and then in use. 

To this subject, among American statesmen, Mr. Calhoun in 
his celebrated "Disquisition on Government," and Mr.Webster in 
many of his speeches, have alluded. Whatever were Mr. Cal- 
houn's inducements to reflect upon the insecurity of capital under 
a rule of numbers alone, he took the ground that governments 
are constitutional and enduring only when they combine the 
concurring majorities of each of the distinct forces which go to 
make ui) the power of societj^. If the priesthood and religion 
i-eally govern society, as they do in Turkey, Italy, Spain, and 
Mexico, then they will have power enough to overturn any state 
in which they are not represented. If the landholders are the 
chief social force, as in Germany, France, and England, then a 
government which ignores the landholders, and rests, for 
instance, on the jDriests, must fall or give place to one in which 
the landholders are represented. If the army and the aristoc- 
racy are the chief forces in the state, as they were in Rome, then 
their ascendency must be acknowledged in the constitution, or 
they will overthrow the constitution which ignores them. And 
finally, if the church, and the army, and the landholdei's and 
capitalists, all cease to be a force in the state, as they do in com- 
munities whei'e capital is equally diffused, and there are a hun- 
di'ed sects, and no standing army exists, there numbers become a 



414 EGONOMIG PHILOSOPHY. 

ruling power, and any constitution which fails to respect them, 
will fall. 

Mr. Calhoun defined a despotism as being a government which 
attempts to rule society exclusively by one of its forces, whether 
such force were the church, the army, the landholders, or mere 
numbers. He defined a constitutional government as one which 
provided for gathering up and representing the views of each of 
the ruling forces of the state in a co-ordinate branch of the leg- 
islature, in such a manner as to give to its united voice a veto on 
the action of the other forces of the state. If numbers, therefore, 
were represented in the lower branch of a state legislature, and 
capital in the upper, he called this a government by concuiu'ing 
majorities, i. e., the majority or voice of numbers concurring 
with the majority or voice of capital ; whereas, if numbers naerely 
elected both branches of the legislature, the government not 
having provided itself with any machinery by which it could 
take the views or listen to the voice of capital, would be, as to 
capital, a hostile despotism, tending toward frequent encroach- 
ments and periodical culminations of force. Mr. Calhoun thought 
the majority would tend not only to tyrannize over the minority, 
but to vest so large a share of power in its individual chieftain, 
for the time being, as would extend his powers into absolute- 
ness, while still wearing the title of an elective officer. Sooner or 
later he would brave both the will of the legislature and of the 
judiciary, perhaps also of his constitutional advisers and of his 
own party. 

According to Mr. Calhoun's definition, our American govern- 
ments represent but one of the forces of society, there being no 
provision for affoi'ding an authoritative expression to either cap- 
ital, culture, character, or experience. 

In marked contrast with the quasi-aristocratic views of men 
like Calhoun, Webster, and Hamilton, the socialist school in- 
veigh with great bitterness against the ascendency which capital 
or individual capitalists obtain in all modern governments, and 
quite as much in those of the United States as in those which are 
more aristocratic in form. They point to the increasing ratio in 
which, with each recurring election, the millionaires seem to 
take the places which were formerly filled by orators and great 
lawyers in the Senate of the United States. They cite the vast 
expenses of conducting, not only presidential elections, but elec- 
tions of members of Congress. These expenses are so great that 
it is alleged syndicates of capitalists, or at least a concurrent 



FORMS OF REPUBLICS. 415 

action and system of contribution among capitalists, are essential 
to decide every election. In this manner, under the forms of 
equality and univei'sal suffrage, a return is made to a government 
by the few. 

Between Mr. Calhoun, on the ultra-aristocratic side, and Karl 
Marx, on the ultra-democratic, society at present maintains a com- 
placent inertia. It is not terrified at the degree in which capital 
is now represented, nor alarmed lest it has not representation 
enough. A time may come, however, when it will consider 
whether a mere choice of capitalists sufficiently answers the re- 
quirement of a representation of capital. But that time is not 
yet. 

The Greek repubhcs were not representative, but questions were 
submitted to the whole people dii'ectly, in a manner resembling 
that of the American town-meeting. 

167. Diversity of Form in Republics. — A republic there- 
foi'e maj^ be aristocratic, military, or democratic, representative 
or direct, and responsible, or having fixed terms of office for its 
legislators. If it consists of many states confederated into one, it 
becomes also a federal republic. The United States of America 
are a democratic, federal, representative republic, constituted on 
the principle of fixed terms of office for its legislators, and there- 
fore without the principle of ministerial responsibility. Each 
State in the Union is a republic, of the same quality as the United 
States, except that it is single and not federal, and sovereign, as 
regards other States of the Union only, but subordinate as regards 
the federal government, and municipal merely as regards foreign 
nations. The judicial tribunal, with which it lies to decide in the 
last resort, for all judicial purposes, what are the relative powers 
of the national and State governments, is itself a part of the 
national government, viz., the Supreme Court of the United States. 

The executive and legislative branches of the government of the 
United States did also, in the war for the suppression of the rebel- 
lion of the Southern States, in 1861-5, successfully decide, by mili- 
tary force, that it was the province of the general govei-nment to 
coerce a seceding State. Hence it may be assumed as settled that 
while the several States have a qualified sovereignty relatively to 
each other, to the extent recognized by the constitution of the 
United States, and while the United States is a government of 
limited and delegated powers, yet within the scope of these limited 
powere the sovereignty of the United States is supreme, and that 
of the several States is subordinate. As resjoects foreign nations, 



416 EGONOMtG PHILOSOPHY. 

the State of New York is as completely a subdivision of the Ameri- 
can nation as Yorkshire or Scotland is of Great Britain. 

France, relatively to the United States, is a highly centralized 
and military republic, which exercises the power of appointing 
mayors of cities, and controlling the police of the country, in de- 
tails which, in the United States, are remitted to the several states. 
Mexico, on the contrary, is, relatively to the United States, an ex- 
tremely decentralized republic, in the nature of a league of states. 
Each Mexican state levies import and export duties, independently 
of the central government, a power the denial of which to the 
several states under our system imparts a more perfect unity to 
the nation, than pertains to Mexico. 

Forms of government differ chiefly in the mode of selecting the 
officers who are to constitute the mechanism, and vary compara- 
tively little in the nature of the mechanism, or in the mode in 
which it runs when constituted. The mechanism itself always 
consists of a single controlling executive will, whether it be that 
of the emperor, czar, chancellor, premier, king, or president, 
in whom, in most cases, centers a power so large, that the whole 
power of the national legislature becomes, for the time being, ad- 
visory, and, in a practical sense, secondary, though (in parlia- 
mentary and republican governments) overruling, at least in 
theory. This central will is influenced by four classes of checks : 
(1) those imposed by an immediate groux3 of personal advisers, 
the cabinet ; (3) those imposed by the legislature, or national' 
council, through permanent laws ; (3) those imposed by the ju- 
diciary, and (4) those imposed by the constitution. The admin- 
istrative force of the United States, numbering in the civil service 
upward of 100,000 persons, is subordinate to the executive ; so 
are the army, and navy, and diplomatic force. These consti- 
tute, together, the entire administrative force, and this does not 
differ greatl}^, in personnel or duties, from what are called the 
bureaux in bureaucratic governments. All the machinery of 
the most absolute government exists, therefore, in a republic, 
and does the practical work of governing in the same manner as 
it is done under bureaucratic governments, so far as the absolute 
authority of the central head, for the time being, is concerned, 
except so far as it is held in check by the constitution, the judi- 
ciary, and the legislature. 

Of the three departments, the executive, legislative, and judi- 
cial, the judicial is that which, at most times, seems to. reach 
the citizen with most coei'cive force, since it is that alone which 



SELECTING A PRESIDENT. 417 

is in the habit constantly of commanding his presence by its 
"writs, of compelling his obedience by its i^unishments, and of 
arbitrarily overruling his judgments by its own. The legisla- 
tive department, of a republic like that of the United States, 
affects him chiefly through its power to regulate tariffs on im- 
ports and money, to encourage navigation and maritime com- 
merce, to provide for transporting the mails, and to influence 
war and peace, and the terms on which he shall render militaiy 
service. The declaration in the American Constitution, that 
only Congress can declare war, is virtually futile, since declara- 
tions of war, as a usage of nations, have nearly ceased to exist, 
and in fact the steps which lead to war ai^e, almost of necessity, 
acts of policy determinable only by the executive. It was so in 
the war with England in 1812, with Mexico in 1848, and with 
the Confederate States in 1861. 

The powers of a republican president are thus practically as 
absolute, for the time being, as those of a British premier. So 
long as he avoids a vote overruling his veto, by two-thirds of 
both houses of Congress, he is not inferior to a Russian czar in 
actual potency. He has the same bureaus at command for en- 
forcing his will, and the same control of the army and navy. 
Natui'ally, therefore, the machinery for selecting the president is 
of prime importance in a republic. Law governs only the formal 
act of voting. But anterior to the vote there is a campaign. 
This campaign knows no law. In monarchies the king reigns ! 
This is fixed by law. But who governs ? This is 

" Variable as the shade 
By the light-quivering aspen made." 

Perhaps the courtiers, or the premier, or the chancellor. Philip 
of Macedon declared that Alexander, while a child, ruled Mace- 
don. How ? "His mother rules me, and he rules his mother ! " 
So, in republics, the people reign — i.e. , they may change their 
rulers. But to change one's rulers is not to x'ule. Those rule who 
manage the machinery for selecting rulers. 

For thirty-five years, from 1790 to 1825, the men already se- ^ 
lected for office managed the machinery of election. This was 
when a caucus of Senators and Representatives of each party 
selected the candidates for President and Vice-President, to be 
voted for either by the people or by one party. The men who 
took part in it were necessarily familiar with practical legislation, 
with economics, with the presidential candidates, and wdth the 
duties of the presidential office. 



418 ECONOMIC PHILOSOPEY. 

A clause of the Federal Constitution provides that the electors 
of President and Vice-President should meet at the several state 
capitals, and there vote by ballot, and therefore in secret, as to 
the names of their candidates. Mr. Hamilton, in The Federalist, 
shows that it was expected to be a marked excellence of this sys- 
tem that no one would know beforehand, and that no one would 
need to know, or would have the right to know afterward, for 
whom any presidential elector should cast his vote. The framers 
of the Constitution had no experience to draw upon, of the effects 
which would be wrought upon the machinery for the selection of 
candidates, by so expanding the right of suffrage as to include all 
the male adult citizens, of widely separated states, in the one act 
of selection, and at the same time so extending the offices to which 
voting would apply, as to subject the chief executive office of a 
nation of 50,000,000 of people dii^ectly, or indirectly, to the popu- 
lar choice. The only elections, with whose machinery they could 
have been familiar, were the Greek, Roman, English, German, 
Polish, Papal, and Colonial. The first were simple town meet- 
ings, and did not involve the element of voting for the sarr^ 
officer simultaneously by different constituencies, at widely sepa- 
rated polling places, and therefore did not call for an anterior 
series of party conventions to nominate candidates, in order that 
all who are in one party might vote for one man, and so secure 
the greatest strength possible for its real or supposed principles. 
At the English elections of members of Parliament the sheriff 
summoned all the voters of the county to the county-seat, one or 
two nominations were made viva voce, and a show of hands, or a 
gathering of the voters on opposite sides of a fence, enabled the 
sheriff to make the count, and he returned accordingly. The 
Roman system was more extended and complete. None afforded 
any precedent for the United States, except the Papal. The ap- 
plicability of the latter, as a precedent, was observed, but not 
entirely followed, by those who framed the Federal Constitution. 
The College of Cardinals which elects the Pope is usually made 
up chiefly of Italians. It contains, however, many representa- 
tives of the Church in other nations. It therefore represents, 
though in very unequal ratio to their numbers, widely separated 
constituencies and about three times as many persons, as, even 
now, make up the American population. 

This college meets and votes in virtual secresy. Each cardinal 
has his individual independence of choice, in the full degree that 
the framers of the American Constitution intended the members 



AMENDMENT BY USURPATION. 419 

of the American Electoral College to have. No anterior nomina- 
tion of a candidate for the Papacy could avail if made, and there 
is no temptation to make one. The entire college, or body of 
electors, meet in one place. All the nominating, intriguing, and, 
if there be any, all the bargaining, must be done in this body, to 
be effective. 

The framers of the American Constitution sought to remove 
the temptation to bargaining and corruption. They would pre- 
serve the independence of the presidential electors whom the 
people of the several States should choose, to make the choice for 
them, by having them vote at widely distant places. Then they 
could not bargain. Hence, they provided that the presidential 
electors should meet at the state capitals of their respective 
States, then 13, now 39, in number. 

The effect was the wholly unforeseen one, that a bargain had 
first to be made, whom these electors should vote for. Precisely 
what the Constitution forbade, the people wanted, viz. , a bargain. 
They did not want independent electors, but subservient electors, 
who would obey the popular will. They caused candidates for 
each party to be nominated in advance of the popular vote, not 
merely for electors as the Constitution designed, but for the 
chief ofiicers themselves, with the implied result, that the elec- 
tors would be bound by a political honor, stronger than law or 
covenant, to vote only for the one man for each office, who had 
been nominated by this anterior machinery of nomirfation. 
Until 1828, it was a caucus of members of Congress of each party. 
Since that date, it has been a national nominating convention of 
the members of each political party, selected by voluntary assem- 
blies. All this lies wholly outside the constitution and the 
statutes. Probably, from its very nature, it can not be made 
law. Thus the electoral colleges become as many dummy bodies 
as there are States. The actual choice passes from the electoral 
college, in two fractions: one half of its intended powers is 
usurped by the nominating convention; the other half of it is 
usurped by votei's at the polls. The privilege of choosing from 
among the whole people two or more candidates for President 
and Vice-President, so that each political party can, in pretending 
to vote for electors, in reality vote for its candidate, is usurped 
by the national conventions. The privilege of voting between 
these two or three candidates is usurped by the voters at the polls. 
The presidential electors abdicate their powers in favor, in part, 
of the voters directly, and, in part, of the nominating assemblies. 



420 ECONOMIC PHILOSOPHY. 

While they take an oath to support the Constitution of the 
United States, they foi^ego the proper exercise, in their own per- 
sons, of that supreme judgment and choice, which the Constitution 
intends them to manifest, without outside dictation or suggestion. 

In order to render such a dictation as that to which they sub- 
mit, an impertinence, they are required to vote by ballot. They 
vote by ballot, but they accept the supposed impertinence as 
being strictly pertinent and proper. The departure, from the 
constitutional intent, is popular, because of the supposed necessity 
of making political parties represent principles. To this end they 
must unite in the assertion of these principles, in advance of an 
election, which they do by their platform. It is felt that the 
power of the people is thus increased; since, instead of voting 
merely for electors, they vote virtually for President. It is 
assumed, also, that the diffusion of intelligence through the 
press, among the people, is so general, that the voters in their 
primitive capacity are as good judges as the electoral colleges 
would be, both of the qualifications and qualities required in the 
presidential office, and of the possession of these requisites by the 
candidates. This democratic correction of the Constitution, with- 
out amendment, is no longer questioned. The document is popu- 
larly regarded as having shown an unnecessary and aristocratic 
distrust of the wisdom of the common people. Under a reign of 
the people this is the most unpopular of crimes. 

Thfe effect is that the people vote for candidates, whom not more 
than one in 100,000 of them knows personally, or has met in 
conjunction with any act of official duty. The pretended 
"information " communicated to them through the press, as the 
day of election draws near, degenerates into slanders for one 
candidate and fulsome overestimate of the good qualities of the 
other. The great mass of voters have no means of sifting the 
truth from the falsehood. They believe nothing, and "go it 
blind." To cause the constitutional system to be adhered to in 
its spirit, would require that, by amendment, the pi'esidential 
electors should meet in one body, instead of in forty. This 
would abolish the function of the national conventions, and 
revive the electoral college, as a constitutional machinery of 
selection. The voters of each congressional district would then, 
in voting for one or more electors from their district, vote for 
a man whom most of them would know personally, and at the 
same time the electors of President and Vice-President would, 
when convened, consist of men of the rank of Senators and Con- 



MAJORITIES RULE BY ONE. 



421 



gressmeii, and who would know personally much of the practical 
working's of the px*esidential office, and all the persons suggested 
by either party as candidates. 

In any system of voting by majorities or pluralities, the two 
parties neutralize each other's votes up to the point where their 
equal voting ends. The majority only counts. Moreover, of all 
the votes in that majority, none but the first one has any legal 
efficiency in deciding the question. Hence, in a strict mathe- 
matical sense, all popular voting is decided by one vote. 

Thus, in the vote between Blaine and Cleveland for the Presi- 
dency, the votes for Cleveland wei'e 4,911,017. Those for Blaine 
were 4,848,334. The plurality was 62,683. The 4,848,334 votes 
cast for Blaine were neutralized wholly by the equivalent num- 
ber cast for Cleveland. Of all the 62, 683 votes which are supposed 
to form the effective plurality, only one vote has any legal effi- 
ciency. A conceded plui'ality of one would have been as effective, 
as one of 62,683. Hence all majority rule becomes, in the last 
analysis, the rule of one. 

In the vote between candidates Hayes and Tilden in 1876, the 
vote as counted in the electoral college was one of 185 to 
184, a decision by one vote. The question, however, whether 
it should be so counted was decided by a vote of 8 to 7 in 
an electoral commission, which had to be so constructed as to 
render such a decision possible, in order to render any decision 
whatever certain. The passage of the law, creating the electoral 
commission, was effected in each house, by votes of which none 
had any efficiency, except the one vote that effected a majority. 

When passed its existence as law depended again upon the 
single vote of the President. The question to be decided in the 
election, turned upon the votes of a single State, Louisiana, and 
depended upon a popular vote, which was divisible into three 
parts, as follows: 

USELESS. EFFICIENT. USELESS. 




422 ECONOMIC PHILOSOPHY. 

The ultimate crisis, wherein the one or the few govern, may 
arise at one election in one place, and at another in quite a different 
jilace. When reached, there is always an equation between bal- 
ancing- quantities, which virtually eliminates them from the con- 
test. Then there is a useless surplus, always thrown away. 
Cutting off all these, one vote decides. 

This is felt in national conventions. Local primaries of every 
ward and town send delegates to the congressional or state con- 
vention. This in turn elects delegates to the national conven- 
tion. In the first, so little interest is felt that it is difficult to get 
one-fifteenth of the persons entitled to vote at them, to take part 
in them. They know their votes there are mere counters, to be 
set off against opposing votes. The actual motive, for attending, 
is usually one of employment. Those who want political favor do 
this work to secure that favor. In the state conventions the in- 
terest is still listless, as respects their action in selecting delegates 
to the national convention, unless it is perceived in advance that 
THE UNIT VOTE wliicli is to decide the national result is in that 
state convention. Then all is vim and fire. In the national 
convention, as each ballot is taken, there is merely anxious in- 
quiry, until the vote nears the point where mathematicians on 
both sides have set off all the fixed and unchangeable votes 
against each other. This brings two candidates where the change 
of one vote will elect one or the other, at least to the candidacy. 
This, if parties are equal, brings him one chance, in two, of the 
election. In the Chicago conventions, of each party, in 1884, the 
excitement was of an intensity that indicated that it was actually 
and in fact here, in this wholly extra- constitutional body, that a 
President was being made. The prospect, that one vote would 
speedily determine the question, could be figured out by all. _ 
Through 36 ballotings, in the Republican convention of 1880, 
the call had been for Blaine 284 or thereabouts, for Grant 304 to 
309, settling finally at 306, and the deadlock had worn every body 
out. 

When it becomes known that neither of the two preferred can- 
didates can be elected, some other must be taken. As it is little 
matter, to many of the delegates, who the other may be, it goes by 
panic. One vote from either side, and another and another, to- 
ward the new candidate, converts the action into a stampede. 
The effect of these straggling votes is foreseen by the immense 
assemblage. Each vote at this crisis is drowned in cheers and 
yells, because it is seen to be the one vote that tells. The rising' 



THE FEW THAT 0H008E. 423 

of the vast assemblage, and the waving of hats and nandker- 
chiefs, laughing and weeping, crying, cheering, and embracing, 
all indicate the emotional crisis. Here, and not in the electoral 
college or at the polls, the true efficient choice is made, at least it 
is either in that convention or in its rival. When it is seen how 
the tide can be made to go by their votes, chairmen of the dele- 
gations of twenty States at once will rise to announce the change 
in the vote of their State. At the convention referi'ed to, Garfield 
received no votes until the thirty-first ballot, and then only one ; 
one on the thirty-second, and one on the thirty -third. On the 
thirty-fourth he rose to seventeen, on the thirty-fifth to fifty. 
Tliis revealed him as the ' ' dark horse " in the race, and on the 
thirty-sixth ballot he received 399, the number essential to a 
choice being 378. The persons who thus reduced the choice 
of the x\merican people at the polls, to a choice between General 
Garfield and General W. S. Hancock, whose selection by the 
Democratic convention was arrived at in the same manner, 
were as few in number as those who would have decided it in the 
electoral college, had the spirit of the constitutional provision been 
found or made practicable, but they were not the same few. 

So in the subsequent contest between Messrs. Cleveland and 
Blaine, the " few" whose casting votes determined the selection, 
in convention, of Cleveland on one side and Blaine on the other, 
were politicians of New York, to the number of a dozen in each 
party. Finally the contest was decided for the nation by a plu- 
rality, Mr. Blaine has said, of less than one-eleventh of one per 
cent, of the voters of New York at the polls. But, in theory, and 
in legal efiiciency, every voter even of this small fraction existed 
as a useless surplus, after the one vote necessary to avoid a tie. 
None will be so obtuse as to suppose we overlook the value of a 
larger majority as a means to avoid a strife over the question 
whethei- this plurality of one exists. But the legal and constitu- 
tional efficiency all centers in the one vote. As all government 
by majorities is thus reducible in final analysis to a selection by 
a few, and a decision by one, it is a delusion to suppose that dem- 
ocratic institutions can impart governiiig efficiency to each indi- 
vidual of the whole numerical mass. The number of persons, in 
whose breasts it lies to exercise a final efficient choice, on eco- 
nomic or administrative questions, is somewhat larger in republics, 
than in monarchies, but it is by no means so much larger as many 
suppose. In America the governing class, as represented by the 
officers filially chosen to perform the work of the federal and 



424 ECONOMIC PHILOSOPHY. 

state governments, is very large, and may be larger than in most 
counti-ies. In some phases it shows greater cost. Thus the six 
hundi'ed members who sit in the House of Commons of England, 
the members of the House of Lords, and we believe the governing 
councils of most or all of the cities, still do, or until very recently 
did, serve without pay. In America the national Congress, 
thirty-nine state and several territorial legislatures, and the com- 
mon councils of most of the cities, comprising probably 5,000 
persons, draw regular salaries. In England thirty-five judges 
of the courts of record seem to have performed the genei'al 
and appellate judicial work for 28,000,000 people. We have 
no similar number of people, among whom the performance of 
judicial work does not call for the services of a number of 
judges, at least ten times as large. Republics are generous in 
expenditure. No throne-room in Europe, it is believed, costs 
more than the chamber of the New York councilmen. No 
palace or public building, for representing the dignity of an equal 
number of people, equals in expense the state capitol at Albany, 
or that at Springfield, 111. The most virtuous and meritorious 
quality, in the practical working of a republican government 
founded on manhood suffrage, when brought into comparison 
with governments professing to represent wealth, land, religion, 
the ai-my, or other special but powerful interest, is the largeness 
numerically of the class to which it tries to do the greatest possi- 
ble good. It may still continue exclusive toward any non- voting 
class, or despotic toward any class which is sure not to come into 
potency as a constituency. It is nearly certain to do far more 
for education, for the dependent, defective, and delinquent 
classes, for the general promotion of industry, and i^robably to 
raake more public improvements, than a government which 
arises out of a condition of industry wherein the voting constitu- 
ency is more narrow in i-elative numbers. It will tax capital if 
it can, and so far as it can, rather than labor. There is great 
breadth of purpose, and in general a shrewd perception of the 
drift of the jDopular weal, as well as wishes, in American politics. 
In the politics of republics which have a less ample treasury of 
national earnings to draw upon, the economic results must be less 
binlliant. The anticipations of the founders of the American re- 
public have not been fully met in several respects. They did not 
suppose that success in obtaining office would depend so much 
more on skill in nuanipulating the machinery of selecting candi- 
dates for office, than on skill in performing the duties of office. 



CONVENTION-MADE KINGS. 425 

They did not desii'e so frequent a displacement, of one inexperi- 
enced officer, by another equally inexperienced, as often occurs. 

They did not foresee the costly political convulsions of the first 
magnitude, and consequent incurment of expense for armies and 
navies, which, when spread over the intervening years, would 
render the military expenses of an unarmed I'epublic fully equal 
to those of any armed empire. 

Questions which it Avas hoped to submit to the arbitrament of 
the whole people, or, if of a few, at least of a well-selected and 
highly intelligent few, seem often to turn on political accidents, 
in far out-of-the-way constituencies of small intelligence. The 
question whether Hayes was elected turns for the moment on the 
point whether a negress named Eliza Cranston, in an obscure 
parish in Louisiana, speaks the truth. Accidental segments, 
insignificant fractions, and small self -constituted and self-seeking 
coteries of party conventions of manipulators, remind us by their 
vehemence and power, that temporarily the pyramid of state rests 
on its apex. The few who control are too accidental, too. un- 
informed, too vmtrustworthy and too extra-hazardous, to deserve 
to have such a load of responsibility thrust on them. * An aristoc- 
racy that becomes such by commanding armies or by acquiring 
lands, is not, in the long run, inferior to one that becomes such by 
skillful management of primary conventions. In adjusting the 
slavery question by popular convulsion, instead of, as in Russia, 
by executive disci"etion,t the Ameincan Republic has shown that 
where a very large number of the people are interested in an evil, 
a government wherein the initiative may be said to spring from 
the common people, and go upward, may be less awake to the de- 
mands of economic, ethical, and moral progress than one in 
which a single enlightened ruler may enjoy an absolute confi- 
dence and unchangeable tenure of power. 

* Upon this, Mr. deTocqueville, in his " Democracy'in America," remarked : "In the 
immense crowd which throngs the avenues to power in the United States, I found very 
few men who displayed that manly candor and masculine independence of opinion 
which frequently distinguished the Americans in former times, and which constitutes 
the leading feature in distinguished characters wheresoever they may be found. It 
seems at first sight as if all the minds of the Americans were formed upon one model, 
so accurately do they follow the same rouie. A stranger does indeed sometimes meet 
with Americans who dissent from the rigor of these formularies, with men who deplore 
the effects of the laws, the mutability and the iarnorance of democracy — who even go so 
far as to observe the evil tendencies which impair the national character, and to point 
out such remedies as it might be possible to apply, . . . but . . . they hold a 
different language in public." 

t Tide "Russia," j30«/, § 594, Ch. XIII. 



426 ECONOMIC PHILOSOPHY. 

The feat are which is most original and admirable is equal 
representation of population according to numbers in the House 
of Representatives, and of large and small States as equals 
with each other in the Senate. This has introduced into the 
United States Senate a spii'it whose aim is to temper power with 
equity. It has been, at most times, the ablest because the most 
equitable deliberative body in the world. The British House of 
Lords might be restored to vitality by such a federation of the 
empire as would embody in it something of the dignity of the 
American Senate. Capital might be represented in it more per- 
fectly than^now, and in addition the various states and dominions, 
now governed by Parliament. 

168. Diversity of Fuuctions and Objects. — Governments 
are further classified as either military or civil, provisional or 
permanent, constitutional or absolute, of mutual checks and bal- 
ances or sovereign in some one department, tributary or supreme, 
temporal or spiritual, religious or secular, general or local, cen- 
tralized or distributed (decentralized). 

An absolute government has some one department, or body, 
which possesses at least legislative omnipotence, and which, in the 
last resort, can effectively control all other departments. In this 
sense, Great Britain is an absolute government, and its parliament 
possesses legislative omnipotence, in itself, and final absolute power 
over all other departments. It can declare the throne vacant, as 
it did on the occasion of the forced abdication of James II. It can 
change the succession, as it has done on several occasions, elect- 
ing a new family to reign, and prescribing a new order of inher- 
itance for the crown. Doubtless, on what it deemed a sufficient 
provocation, or reason, it could terminate the heritable quality in 
the crown, and make it elective. This would be styled, in English 
parlance, a revolution, and a change in the fundamental law. The 
English parliament, however, has tlie power to cliange the fund- 
amental law by whiclx it is bound, and this makes it absolute, or 
a law unto itself. It lias power to impeach, and execute, all judges 
who should oppose its will, as well as all ministei's of the crown 
who should nullify its laws or disobey its commands. The pi-o- 
ceedings of the Long Parliament, and of the Protectorate imder' 
Cromwell, including the execution of Charles I. , are, out of def- 
erence to the kingly principle, usually assumed, in English dis- 
cussion, to be unconstitutional and revolutionary. They were, 
however, assertions of the practical omnipotence of parliament, 
which underlie and cause the present supremacy of the House of 



UNITED STATES OOVERNNENT. 427 

Commons. Without these, and the subsequent parhamentary 
revolutions, it would not to-day be the theory of the English gov- 
ernment that parliament is supreme over the crow^n, and that in 
parliament the House of Commons is supreme over the House of 
Lords. Still, the particular machinery through which the Com- 
mons assert their supremacy, over other branches of the govern- 
ment, is that, by means of the principle of responsible government, 
the House of Commons controls the ministers of the ci'own, and) 
as these have the power at all times to appoint new peers, they 
can at all times, through the appointment of new peers, control 
the House of Lords. 

The United States, on the other hand, is a government of mu- 
tual checks and balances, or wherein absolute sovereignty is not 
lodged in any one department, but each may check the other. 

The departments for this purpose are(l) the executive, of which 
the President is chief, and which includes the cabinet and all 
subordinate officers (about 120,000 in all) of the civil service, the 
diplomatic officers and consuls, the army and navy ; 

(2) The legislative department, consisting of both houses of 
Congress ; 

(3) The judiciary, comprising all the federal courts, viz. , the 
Supreme Court of the United States, cii'cuit courts, district courts, 
territorial courts, court of claims, and courts of the District of 
Columbia. 

The executive, legislative, and judicial departments act as 
checks upon and balance each other in certain ways. If the ex- 
ecutive and Congress are dissatisfied with the workings of the 
Supreme Court they have the power by law to reconstitute the 
court, expand or reduce the number of judges, and, in case it is 
expanded, the President has power by the selection of the added 
judges to determine the political complexion of the court, and in 
some degree the quality of its judicial decisions upon the class 
of legal questions he has in mind at the time he makes the ap- 
pointment. Action of this kind is held in disfavor, however, as 
large numbers of the people regard the Supreme Court as a body 
that should not be subordinated to the views of the President and 
Congress in its judicial decisions, even where they bear in their 
effect upon the political departments of the government. 

The two houses of Congress have also the power to impeach and 
remove either the President, or the judges of the Supi'eme Court, 
for high crimes and misdemeanors. 

Tlie Supreme Court has, by judicial construction, in consequence 



428 ECONOMIC PHILOSOPHY. 

of the existence of our written Constitution, a power to declare 
an act of Congress, regularly passed, null and void, if it holds the 
act to be in conflict with the written Constitution. This is a 
power not possessed by the courts under any other form of gov- 
ernment, unless it may have been copied, from ours, into the con- 
stitutions of some of the Spanish- American states. 

The President, through the veto power, can check any action of 
Congress not capable of being passed by a two-thirds vote over 
his veto. In practice, each of the departments of our government 
has, at times, exerted a powerful check on the action of the 
others. 

The distinction between temporal and spiritual government is 
essential to a clear view of the science of comparative govern- 
ment. 

A government is temporal if it has charge of the bodies, prop- 
erties, and legal rights of its subjects, with power to inflict cor- 
poral and pecuniary punishments, and to regulate the transfer 
and descent of property. Such are the governments of England, 
France, Italy, and Spain. 

It is spiritual, if it have charge of the consciences of any 
class of subject persons, with a purporting power to dictate to 
them what is right and what is wrong, or what will make for 
their supposed weKare in a present or a future world. Such is 
the government of the Pope of Rome, of the Patriarch of Con- 
stantinople as the head of the Greek Church, and of the Czar of 
Russia as the competing or antagonistic head of the same Greek 
Church. Such also, under the Mohammedan faith, are the Sultan 
of the Ottomans, and the Sheik ul Islam of Mecca. 

In England spiritual and temporal powers combine in the 
queen. In Germany, they unite in the emperor. In Spain, Aus- 
tria, and Brazil, the Spanish- American republics, and all the har- 
moniously Catholic countries, the temporal power is in the state, 
but it acknowledges the spiritual supremacy of the Pope of 
Rome. 

In France the republic is a secular republic, entangled with 
the embarrassments growing out of a former union between the 
monarchical state, to which it succeeds, and the church. 

In the United States the distinction between temporal and spir- 
itual powers does not exist, but the federal and state governments 
are seculai', exercising no influence Avhatever over religious 
affairs, and no such thing as a spiritual government is recognized 
by law. Secular and religious government ai-e distinguished in 



GENERAL AND LOCAL. 429 

the United States as follows : A state is secular, when it identi- 
fies itself with no religious faith of any kind as a state, hut leaves 
its citizens and its officials, when acting in their moral capacity 
as individual persons, free to perform or neglect, to observe or 
to avoid, any and every religious duty or pi'inciple as each j)er- 
son shall for himself elect. In the United States, therefore, all 
religious organizations are simply private corporations which are 
permitted to exercise a merely persuasive and not in any degree 
a coercive power. Nor could a coercive power be conferred upon 
them, by the consent of their members, which would not be re- 
buked and set aside, or punished, by the civil courts. 

General and local government are distinguished as follows: 
General government consists of such of the functions of govern- 
ment as ai-e exercised by the same authority, according to the 
same rules, and by persons selected in the same general manner, 
for extended areas of country and large and widely separated 
and numerous populations. Local government consists of such 
of the functions of government as are permitted to be broken up, 
subdivided, or " morselized, " so as to be exercised by diverse au- 
thorities, by officers selected according to different rules, and act- 
ing in diverse ways in different parts of the country. 

169. Liocal Goveriiinent. — All the subdivisions of gov- 
ernment, according to their form, which have been heretofore 
named, whether as monarchies, aristocracies, democracies, or re- 
publics, whether as bureaucratic, hereditary, or imperial, wheth- 
er as responsible or of fixed terms, whether as parliamentary and 
absolute, or of checks and balances, whether as despotic or free, 
whether as temporal or spiritual, religious or secular, have liad 
reference to the general government. The general compares 
with the local government as the spires, domes, towers, and loft- 
ier architectural features of an edifice, as seen from without, com- 
pare with its inner apartments, its parlors, kitchens, sitting- 
rooms, and conveniences for home life. The comfort of a people 
dwelling within an edifice may depend more on the mode of get- 
ting the kettle over the fire, or ventilating the sleeping-rooms, or 
expelling flies fi^om the larder, than upon the question whether a 
tower is true Gothic, or a pillar is absolute Corinthian. So the 
amount of real liberty and prosperity enjoyed by a people may 
depend chiefly upon the administration and form of the local 
government, which lays out r-oads, builds bridges, schools, and 
sewers, docks, markets, and baths, provides gas, water, and paved 
gtreets, licenses street railways, cabs, and carts,, and also trades 



430 ECONOMIC PHILOSOPEY. 

and amusements, lays out parks, opens public libraries, regulates 
health, buries the dead, and feeds the homeless poor, and which, 
in some countries, lays out farms as well, and divides their pro- 
duce among the workers, or collects their wages, or shuts out or 
licenses alcoholic drinks. 

Local government gets nearer to the people in many things 
than general government, and may be of a very unlike character 
to that of the general government. In Russia, for instance, each 
mir or village commune is a little communistic democracy, in 
which no peasant can lose his title to his home, while in Ireland 
each landed estate is a little absolute despotism, in which nothing 
but a revolution could insure to the peasant his home against his 
landlord. Thus the freer character of the general government, in 
England, is a less valuable boon to the Irish peasant, than the 
freer character of the local government of Russia is to the Russian 
peasant. Hence, in estimating the relative freedom, and effects 
upon industries, of various governments, it is more important to 
look at the substance than the form of all governments, and to 
look at the mode in which the local rather than the , general 
functions are administered. 

In the United States general government is not confined to 
national government, nor are local functions strictly identical 
with state, city, and county functions. 

So far as the national government runs a post-ofiice, light- 
house, harbor, court, revenue, or customs oflBce, in a town, that 
becomes local government within that town. All governments, 
therefore, have some local functions. In the United States, how- 
ever, most of the functions of local government devolve on 
States, counties, and cities. Their economic influence is felt 
chiefly by the action they take, or omit taking, concerning : 

1. The opening up and surveys of new lands, and the denuda- 
tion and restoration of forests, destruction of animals, etc. 

2. The construction of highways, roads of all kinds, including 
railways and canals, the building of aqueducts for cities, the 
improvement of rivers as highways, protection from rivers, and 
ii'rigation. 

3. The construction of residences and their insurance, including, 
in cities the regulatioii of their materials, height, kind, and 
quality. 

4. Creating, registering, and vindicating titles to land, including 
the regulation of transfers and descent of lands. 

5. Their protection to persoiaal liberty and to the security of the 



INDUSTRIAL RELATIONS. 431 

family relation, to freedom of contract and association, and their 
provisions as to corporations and trades. 

6. Their provisions for education, and the quality of the educa- 
tion they impart. 

7. Their provision for the relief of the poor, the maintenance 
of the incompetent, defective, and delinquent classes, and detec- 
tion and punishment of the criminal classes, including prisons, 
and colonization. 

8. Tneir action as respects vice and intemperance, food, drinks, 
popular amusements and public morals, including in cities public 
parks, libraries, fountains, and baths. 

9. Their methods of taxation and theory of the purposes to 
which it is adequate. 

10. Their provisions for rewarding discoveries in science, inven- 
tions in the useful arts or masterpieces in fine art, and for granting 
by letters patent to inventors and by copyright to authors the 
monopoly of the profits accruing upon their works for a period 
of time. 

11. Their provisions as to coast and naval defences, armies, 
police, and such coercive means as may be essential to the per- 
manence and good order of the State. 

170. The State as Related to Industry.— In estimating 
the relation of governments to industry, especially with the view 
of determining whether the aggregate experience of mankind 
goes to show that the functions of government are alike in all 
states or different in each, and whether they have been injuriously 
or beneficially exercised, it is important first to grasp in their 
entirety all the functions of all parts of the government, of the 
local as well as the general, the colonial as well as the home 
government, and of the army as well as of the tai'iffs. 

No assumption is more frequent, in economic discussion, than 
that England not only practices, but stunningly illustrates, free 
foreign trade. No fact has entered so prominently into modern 
history as that England has constantly made use of her armies in 
India, Ireland, Turkey, Egypt, Africa, New Zealand, Borneo, 
China, Japan, and among all barbarous peoples, to coerce foi'eign 
trade, or, as she expresses it, to " open barbarian ports to civiliza- 
tion." If one nation practices military protection on behalf of her 
foreign tirade, the result may be as efficient, in its way, as another 
nation, differently situated, may achieve, by practicing tariff pro- 
tection in favor of its home trade. 

As the Roman empire was circumstanced, the building of great 



432 ECONOMIC PHIL080PHT. 

roads, all centering in Rome, may have been the most eflBcient 
form of protection to a state whose chief industry was military 
conquest. 

In the modern British Empire, on whose dominions the sun 
never sets, lines of steamers and coaling stations may take the 
exact place, and perform the precise function, of Rome's great 
roads. In the Middle Ages, when money was scarce and produc- 
tion reduced to a low stage, the owner of land, seeking security 
against the marauder, would beg to become the vassal of a ruthless 
baron in order that he might exchange weakness for protection, 
and would pay rent in military service, of course neither for 
capital expended, nor for fertility, nor for location, but for 
security. But he would consult his own best interests at the 
time, as certainly as he did later on, when money became plenty, 
in commuting his military rent into a money rent. 

The exterior or visible government of society, known as the 
state, must, however, always be recognized by the student of 
economics, as a sort of apparel thrown over that real and involun- 
tary^organization of society, under industry, which may be called 
the industrial state. 

The industrial state has a different set of chiefs, or heads, from 
the civil state, whose ascendency is indicated only by the rate of 
remuneration they can command, the quantity of capital and la- 
bor they can control, and the quantity of business they can trans- 
act at a profit. Voting is performed in the industrial state every 
time a contract is made, merchandise is transferred, or a commod- 
ity is created. An employer says : "I will give you $20 per week ; 
will you work for me ? " The employee says : " I will." Thence- 
forth both are integral units organized into one larger body — so- 
ciety. One commands, the other obeys. One steers, the other 
rows. One sells his time for wages, the other sells what this time 
has aided to produce — the product, for profit — if he can. If he can 
not sell it, having produced something not wanted, his steering 
capacity is cut down, and lessened, by the fact that he has lost a 
part of that capital in right of which, alone, he does the steering. 
Every time, therefore, a retailer says to his customer, " Will you 
buy," and the customer says, " I will," the i-etailer is promoted 
or approved in his office, as, by his customer's vote, that he has 
usefully supplied a demand. Thus the organization of the indus- 
trial state is, at once voluntarily and involuntarily, extended every 
time a purchase is made or a business act performed. The custom- 
er's act elects the retailer. The retailer's act elects the whole- 



THE INDUSTRIAL STATE. 433 

saler. The wholesalers elect the manufacturer, and the manu- 
facturer must foresee the demand correctly, or part with his 
capital. The employer's choice elects the workers, and the workers 
are relieved of the necessity of watching the markets of the prod- 
ucts of their labor, and need only watch the markets of labor it- 
self. As votes in the political state give the title to office, so capi- 
tal in the industrial state, which can only be preserved by success, 
gives title to command. Every capitalist can comtnand all the 
labor he chooses to pay for. By simplifying their task, to the 
single one of selling their labor-time and labor-force to whoever 
will pay the highest price for it, laborers are enabled to give far 
more time and foi^ce to the work actually to be done. By simplify- 
ing the retailer's task to the single one of buying at five what he 
can sell for seven, the retailer saves all his time and force for efforts 
which have profit in them. And by the conjoint action of every 
member of society, in the line in which he can be paid, and in no 
other, he most closely serves demand, which is the most comprehen- 
sive name for human need, or for the relief of want. Thus, in the 
industx'ial state, the higher and more intense is the egoism or desire 
of profit, as the motive of human action, the prompter and more 
efficient is the satisfaction of demand, the relief of want, or the 
attainment of practical altroism as the effect. 

The political state is the garment, or apparel, of the industrial 
state. Governments are but the expression, for coercive or at- 
tractive purposes, of the interest and will of society, as it is formu- 
lated by their material condition and occupations. Where the 
masses of the people have the means of comfortable living, by 
nearly continual labor (and without the continual labor of nearly 
all it is impossible, in the nature of things, that any should live 
comfortably), there, persons will be free ; governments will rest 
lightly on the shoulders of the people. But little coercion, either 
by governments or by employers, will be required, and both gov- 
ernment and industry will become attractive rather than coer- 
cive. 

171. Coercion and Attraction in the State. — The attrac- 
tive functions of government, as distinguished from its coercive, 
consist in the education of youth, the establishment of light- 
houses and life-saving stations, the distribution of seeds to secure 
the inti'oduction of new branches of agriculture, the creation of 
artificial corporations, having perpetual life, as a means of at- 
tracting the capital of investors into investments of a perpetual 
character, the building of levees to restrain floods, and of canals, 



434 :aCOnOMlG PHtLOSOPHT. 

works of irrigation, and aqueducts, and building or aiding rail- 
ways, common highways, sewers, drains and bridges, the author- 
ization of banks for the issue and loan of credit-money, and of 
savings banks for making the hoarding propensity in the poor 
productive ere yet the accumulation is large enough to be used as 
a working capital ; enacting laws of descent, whereby human 
affection and love, in one generation of workers, may be attracted 
onward in their toil, by the hope of being able to make provision 
for those they shall leave behind ; authorizing the creation of 
insurance companies and trust funds, for tiding over the calami- 
ties of fire and death by the interested co-operative aid of those 
who do this good to others, on a bargain that others shall pay 
them for the service ; the regulation and check of international 
competition in industries by tariffs ; the diversification of indus- 
tries by securing certain valuable markets to producers, the estab- 
lishment of colleges, the propagation of fish in rivers, the tunnel- 
ing of mines on occasions when individual enterprise might neg- 
lect a much-needed work, the attractively encouraged emigration 
of the poor to new and better homes, the collection and universal 
diffusion of an accurate bulletin of the weather one day in 
advance, the assortment of letters for transmission by routes 
selected and paid for by the government, the granting of patents 
to inventors, and a hundred others. 

This enumeration might be extended, but it suffices to show 
how vastly, in modern government, the attractive, or educing, or 
educating, functions of government have risen above and come 
to outi'ank the coercive. In most of the Northern States of the 
Union from two-thirds to three-fourths of the revenue of the 
State is expended on the single purely attractive function of 
educating youth, a function which, until barely a century ago, 
it was not supposed that government had anything whatever to 
do with. 

With the advance of government to functions more and more 
attractive, there has been a recession, in all newer and freer 
counti'ies, from the despotic, military, and coercive functions, to 
which government was formerly confined. Where, a century ago, 
134 crimes were punished with death, now only from one to four 
are so punished. In America, and the British colonies, standing 
armies and coast defences are of the past. Titles, the survival of 
military rank and soldierly life, are fading out and less esteemed. 
Finally there is a growing feeling that woman, debarred by her 
sex from founding the coercive or military state, except she offer 



COERCIVE GOVERNMENT. 435 

herself for military service, is not by the same logic barred from 
taking- part in those functions of government which are intellec- 
tual, moral, and attractive. The eai'liest, and perhaps, next to 
education, the most iinportant instance in which government has 
passed from coercive to attractive functions has been in practicing 
protection to national industries against foreign competition. 

172. Governnient by Force. Voting by Males. — The 
coei'cive functions of government bear toward the attractive 
much the same relation as coin bears toward credit money. Had 
there never been government by coercion, a government by 
attraction could not have arisen. The tramp of contending armies 
precedes respectful obedience to the law and the courts. The 
memory of hostile encountei'S overshadows the courteous language 
of diplomacy, and gives efficacy to arbitrations. It is a funda- 
mental maxim that "the law always implies force." All gov- 
ernment implies an army, navy, and police capable of enforc- 
ing its will. In fact all governments have been established, as 
against those who opposed their establishment, by armed force. 
The summary manner in which the Tories, who opposed in New 
York, New Jersej^, and elsewhere, the formation of the American 
Government, were driven out of the United States, as fugitives, 
places the United States in the same category as all other govern- 
ments in this respect. The "Continental Congress" met, not to 
deliberate with Tories as to whether it should itself exist, but to 
deliberate among Whigs, and as a purely Whig government, how 
all opposition to itself could best be forcibly ovei'come. As armies 
are the immediate authors and sponsors of all government, 
whether republican or monarchical, it is natural that, when voting 
comes to supersede fighting as a means of selecting the officials 
who are to govern, the voting should devolve exclusively on the 
sex which had done the fighting. This alone, and not any differ- 
ence of intelligence between the two sexes, has caused the male 
sex to monopolize the right of suffrage. 

In Sparta, and one or two other of the States of Greece, accord- 
ing to Aristotle, women bore arms in war, owned most of the 
property, and voted. In whatever state they should be admitted 
to vote it would logically and natui'ally follow, if not at first, yet 
in the long run, that they would bear arms also, if only from a 
sentiment of honor. For as women are far more exacting than 
men in their standard of requirement as to the number of sup- 
posed good objects the government should be called on to elf ect, 
they would constitute the class of voters most given to enacting 



436 EGONOMIC PHILOSOPHY. 

high-keyed, reformatory, and exacting laws, which would raise the 
number voting against them to close proximity with the number 
voting for them. Such laws, which ai^e barely passed by a small 
plurality of votes, and which imply a large interference with the 
personal liberty of many citizens, of perhaps the poorer class, 
excite a degree of opposition to their enforcement which the ordi- 
nary laws against crime do not arouse. The difficulty of their 
enforcement renders much personal collision necessary, and in- 
such case somebody must give and take the blows, or the enforce- 
ment of the law would be abandoned. 

In a state in which women should vote on equal terms with 
men, the laws would soon come to be divided into those which 
bore the general sanction of both women and men, and those 
which sought to press the magistrate's club into the work of en- 
foi'cing as law the finer sentiments of chastity, temperance, 
purity, and religion, which men are content to remit to the domain 
of morals and persuasion. 

In this manner there would be two kinds of laws, the men's 
laws and the women's laws. The former would be enforced ; the 
latter would not, unless women should talce it upon themselves to 
do so. To remit these laws to mere persuasion would leave them 
just where the sentiments they embody are now. The attempt of 
women to enfoi'ce them would convert them, as a logical corol- 
lary, into an arms-bearing sex. That the female sex would accept 
the right of suffrage, if accompanied by the condition that they bear 
arms and perform police duty, is hardly contended. It is doubt- 
less the opinion of the great mass of women, that no exigency 
of their situation calls for action so revolutionary, and, to nearly 
all of them, so distasteful. The exclusion of women from the 
right to vote can only be logically ascribed to the fact that gov- 
ernments are an affair of armed force, in which it is contrary to 
the course of nature and civilization that woman should partici- 
pate. 

This monopoly of the fighting function by the male is, in its 
turn, an evident consequence of the pliysiological necessity that 
motherhood shall be made secure, and motherly attention adequate 
in delicacy, to the needs of infancy. The germs of this division 
of functions between the sexes appear in neai'ly all of the higher 
forms of quadrupeds and bii'ds,and are wholly absent only among 
reptiles and fishes. A division of functions between the sexes 
which is so much broader, even, than the human race, and so 
much older than history, is not likely to become capable of over- 



ORGANIZED ARMIES. 437 

throw in fact, however interesting- may be the grounds on which 
its obhteration is pressed. 

173. Annies, and Their Cost. — In ancient times, war was 
a struggle between all the members of two hostile populations. 
In modern times, the principle of division of labor is applied to it. 
It is a physical fight only between the two organized armies in the 
field ; the populations on both sides take part in it only as tax- 
payers, or as their transit and trade may be interrupted, or as 
they are recruited, drafted, or enlisted into the army. Armies 
ai'e now recruited by two modes — voluntary enlistment, and the 
draft. Great Britain adheres to the former system, which in prac- 
tice usually degenerates into an abuse known as the press-gang — 
a dozen armed men setting upon one, and compelling him to 
"voluntarily enlist," either through the blandishments of intoxi- 
cation or the force of a sound drubbing. Blackstone, a century 
ago, denounced the press-gang as unworthy of a free country. 
Either it, or very high bounties, are necessary under the system 
of voluntary enlistments. 

It was by the conscription, or drawing among all citizens by 
lot, that Napoleon was able to sustain the arms of France against 
the Allied Powers from 1793 to 1815. It has since been adopted 
or revived in all the European states, and was resorted to by the 
United States in its war of 1861 to 1865. 

The relative economy of the policy of maintaining a large army, 
or a small one, is not so simple a problem, since the war last 
named, as it had previously beeii assumed to be, by many advo- 
cates of the doctrine that " that government is best which gov- 
erns least." In 1790, Congress fixed the rank and file of the 
American army at 1,216 men. In 1814, a small English force of 
only 3, 500 men was able to seize and burn the Capitol and the 
city of Washington, though the country had then a population 
of 8,000,000 persons, or about as many as Egypt contained when, 
under her first great military leader, Sesostris, she extended 
her empire over Ethiopia and Southern Asia, eastward to the 
Ganges, and northward to the Caspian. 

During the war of 1861-5, the government of the United States 
called under arms 2,759,049 men, of whom 2,656,053 men were 
actually embodied in the armies. Adding to these the 1,100,000 
men embodied by the Southern States into their armies, the total 
force called into the field, in a countiy whose hobby it was to 
liave no armies, amounted to the enormous number of 3,756,053 
men, whereas the entire standing armies of Great Britain, 



438 ECONOMIC PHILOSOPHY. 

France, Germany, Russia, Austro-Hungary, and Italy combined, 
when on a peace footing, amount to only 3,265,000 men, their 
active army during war to only 5,101,000 men, and their entire 
nominal forces, including their active army, depot troops, garri- 
sons, and reserves for 244,000,000 of people, sum up to only 6,470,- 
000 men, or but fifty per cent, more than the United States actu- 
ally mustered into the field in five years. The entire annual 
expenditure of these six leading nations, on their armies, is £96,- 
000,000,* or $480,000,000, an expenditure about half as great per 
day as that to which the United States alone was subjected dur- 
ing the gi'eater part of the war, and the total of which, for twenty 
years, would be required to pay the cost of the American war 
(19,000,000,000) t for five years. The military expenditure of 
Great Britain is $3 per head per year, for the population of Great 
Britain and Ireland, or one cent per working day, being about one- 
sixth the cost of intoxicating liquors. The military expenditure 
of France is 10s. sterling (about $2.50) per head per annum, or 
about two-thirds of a cent per working day. That of Germany is 
fifteen and a half millions of pounds sterling ($78,000,000) for 
41,000,000 of people, or say one-half cent a day for each person. 
That of Russia is $1.25 per capita per year, or one-third of a cent 
a day. And those of Austro-Hungary and Italy are about the 
same. Since the war of 1861-5, the American expenditure, per 
capita, for interest on the war debt and pensions, about equals 
the European rate of expenditure per capita for standing armies 
and interest. 

It cannot be assumed, therefore, that the American experiment, 
of dispensing wholly with a standing army, has proved economi- 
cal to American tax-payers, unless it be also assumed that the 
maintenance of a standing army would not have prevented the 
war for secession in 1861-5. It is difficult to imagine, however, 
a government having 100,000 armed men at its command calm- 
ly waiting until eleven States had, one after another, met in 
their legislative sessions, and resolved to withdraw from the 
Union, when a single regiment of obedient troops would have 
proved competent to disperse, or place under arrest, either of these 
bodies. Since 1860, the United States, as an integi'al state, indis- 
soluble at the will of any one or eleven States, owes its existence 
to the army it was able to create. The collision between Ger- 
many and Austria, ending at Sadowa, and between Germany and 

* Encyclopsedia Britaunica. t Estimate of David A. Wells. 



ARMIES CREATE THE STATE. 439 

France, terminating' at Sedan, have converted Prussia into a 
German empire founded chiefly by an army. The kingdom of 
Italy under Victor Emmanuel, is an army-made kingdom in effect 
— the irregular bodies of carbonaiu and lazzaroni, under Garibaldi, 
counting' for an army because of the absence of any effective op- 
position. England's rule over Ireland and India rests on military 
force, more or less nascent, and hence, in her reign over 200 out 
of 225 millions of her subjects, England is an army-made state. 
Russia, Austro-Hungary, and the Ottoman Empire do not aspire 
to be other than army-made states. Hence, in the industrial 
sense, armies may be defined as the factories which take in races, 
quarrels, and superstitions as their raw material, employ sol- 
diers as their working operatives, make use of money, credit, 
taxes, loans, guns, powder, ships, and shells, as their circulating 
capital, and turn out states, empires, and republics, and indirect- 
ly popular elections, settled constitutions, legislatures, laws, 
courts, and political and civil oi'der, as their finished products. 
They stand in the same relation to the states which they estab- 
lish, as strikes and lock-outs do to the subsequent rates of wages. 
Army expenditures, therefore, stand on the same footing, econom- 
ically, as expenditures for education, for elections, for courts of 
justice, and the punishment of crime. They have been classed, 
by many economists, as wholly unproductive, or as simply de- 
structive. 

When viewed in perspective, over long distances of time, they 
often seem more productive than periods of peace. The treasures 
of gold and silver, obtained by Alexander from the hordes of East- 
ern princes, introduced money in Western Europe. The con- 
quests of Rome were missionary in their effect. Many modern 
wars have directly produced the most wide-spread industrial 
benefits. No feature in economic history is so difficult of accu- 
rate adjustment as that of the relative cost of wars and of armies,* 

* Col. Colley, professor of military administration at Sandhurst, writing in Encyclope- 
dia Britannica on' 'Army," says of military expenditure : "Perhaps it might more fairly be 
called indirectly productive, as necessary to the maintenance and extension of civiliza- 
tion, and the production and development of trade. Further, the value of property in- 
creases with increased security, and military expenditure within certain limits thus 
tends to repay itself. Broadly, however, it may be treated as a tax for insurance, and 
as so much withdrawn from the productive power of the nation. The object of all mili- 
tary institutions is to develop the highest fighting power— that is, to attain the greatest 
security with least strain on the industry of the country— the latter being measured not 
by the cost of the army, as shown by the budget, but by the amount of productive labor 
withdrawn and disturbance produced. All questions, therefore, have to be considered 
under two aspects, military and economical — that of efficiency and that of cost." 



440 ECONOMIC PHILOSOPHY. 

of navies, and fortifications, as compared with the often more 
costly experiment of attempting to dispense with them, or of 
failing to maintain them with adequate vigor. 

Peru, for many centuries a cultivated, aristocratic, populous, 
and wealthy country, inheritor of the pride of the Castilian and of 
the sources of the wealth of the Incas, accustomed to despise the 
base-born and grovelling Chilians as a coarse, brutal, and half- 
savage nest of mountain starvelings, has within three decades past 
been reduced to a bankrupt and subject province, the prey of the 
cruel savages it had despised. 

History is full of melancholy proofs that agriculture and com- 
merce, banking and exchange, manufactures and finance, all de- 
rive their liberty to exist in peace and security, either recently, 
presently, or prospectively, from the soldier. After all is said, 
that can be, in favor of holding the military power at all times 
subordinate to the civil power, the historic fact remains that the 
civil power owes its existence to the military, and, if adequately 
resisted, falls back for defense upon the author of its being — the 
army. In this last resort the productive power of the state, in its 
totality, becomes bound up in, and is dependent, upon its military 
power. 

174. Crime and Its Punisliinents. — Crime is little else than 
a continuance, by sporadic individuals, of that warfare against 
order, which, if carried on by organized bodies of men in military 
array, is called war. It consists in gratifying our desires by the 
commission of acts which the state condemns and punishes. In 
the United States about 30,000 convicts, in the penitentiaries, attest 
the fact that, in the most favored industrially of nations, about 
one in 2,000 of the population is a criminal. Owing to the very 
large number of criminals that escape punishment, the propor- 
tion of those who at times and in sudden heat, as well as profes- 
sionally and as a settled business, make war on society, is some- 
what larger. There are also 11,000 lesser culprits. 

The state does not punish, priraai-ily or chiefly, to reform the 
criminal, but to protect itself, and preserve that order, without 
which there could be no productive industry, or settled liberty. 
No ethical perfection can be claimed for its statutes or decrees, 
whether executive, legislative, or judicial. 

Its right to govern does not depend on its governing always 
rightly, since that would be to require infallibility from the 
fallible, and since no other criterion more wise than the state it- 
,self can be found to determine whether it is right. 



THE PROBLEM OF CRIME. 441 

" No thief e'er felt the halter draw. 
With good opinion of the law." 

Except as the minority, which has to be overruled in all gov- 
ernment, may agitate with the view of converting itself into the 
majority, and so becoming in fact the state, the opinions of such 
minority are pi-actically immaterial. The state is therefore as 
wise, as just, and as humane as the aggregate opinion which goes 
to make up its decisions, and no more so. It expresses a grand 
average. In the view of later or distant peoples, a state may 
itself commit great blunders, crimes, and 'inhumanities, and in 
no sphere is it more possible to do so than in its punishments of 
crime. In its own view it can not err, because there is no cri- 
terion by which to adjudge its action to be error, unless it may 
be the very flimsy criterion of popular clamor. But a clamor 
may be raised as easily when the state is right, in the judgment 
of its best minds, as when it is wrong. For popular clamor also 
has its errors and its crimes. 

Crime is at bottom a problem in economic science (as well as in 
moral) for four reasons, viz. : 

1. Men, in most cases, become criminals only as they fail in 
productive industry. 

2. In a like vast majority of cases their reform can be best 
effected, if at all, by improving their facilities for making a living 
honestly. 

3. The modes of punishment usually adopted eliminate the 
criminal, temporarily or permanently, from among industrial pro- 
ducers, and render him a burden on them. 

4. Crime itself is, in most cases, an attempt at a redistribution of 
wealth, power, or privilege, in a manner which assumes that the 
criminal will not abide by the mode of economic distribution 
brought about by natural and social law. He is not content with 
his own. 

M. Quetelet * took a less economic view of crime, but while he 
compared crime with age, sex, occupation, education, geographical 
districts, etc., he neglected to compare it, systematically, Avith mei'e 
poverty. Of course he could not find a correspondence for which 
he did not look. After noting that instruction has less influence 
than is generally supposed, and that instruction which consists 
only of reading and writing, to the neglect of morals, may become 
a new instrument of crime, he says : ' ' The same is true of poverty. 

* " Kecherches sur le Penchant au Crini"." A. Quetelet, 1833. 



442 ECONOMIC PHILOSOPHY. 

Most of the departments of France, reputed the poorest, are at the 
same time the most moral. Man does not generally resort to 
crime because he has but little, but rather when he is suddenly 
reduced from a condition of ease to one of distress, and of insuf- 
ficient means to gratify his accustomed wants." M. Quetelet's 
specification does not completely justify his position. The poorer 
districts of France might be more moral than the richer, and yet 
if the immoral class, in these districts, were all the poorest class, it 
would still establish that their immorality, and their poverty, were 
either due to each other, or to like caiises. The comparison must 
not be made between districts, but between the richer and the 
poorer population of any one district. The comparison (cited 
ante, ch. 1, § 15, of this work) in the case of Austria would be 
duplicated in any other country in which the statistics should be 
collected. It would be found that the trial and punishment of 
well-to-do people, for crime, is so rare as to prove that crime stands 
chiefly related to poverty. 

M. Quetelet says, as to the sexes, in France, ' ' that only one 
woman, to four men, comes before the tribunals." This pro- 
portion of females is larger than in America ; but, even in 
America only one woman, to four and a half, makes the struggle 
for subsistence in person, by engaging in an industrial occupation. 
In a visit to the penitentiary at Joliet, 111., the writer observed 
that there were but thirty women to 1,500 men.* But it may be 
doubted if in Illinois the number of women who make the strug- 
gle for subsistence, wholly unaided by any male protector, exceeds 
one in fifty. 

M. Quetelet found that both in warm weather and in warm 
climates, as compared with cold, crimes of violence and against 
persons prevail, but that in cold weather, and in cold climates, 
crimes against property multiply. He found that the country in 
which there are most frequent changes, and the greatest admix- 
ture, of population, in which industry and commerce bring people 
into most active collision, and persons and property circulate most 
actively, and in which there were greatest inequalities of fortune, 
there was the highest ratio of crime to population. The higher 
the rank of society, and grade of instruction, the less the culpabil- 
ity of women relatively to men, and the lower the rank the less 
the moral difl^erentiation between the two sexes. The liberal pro- 
fessions tend toward crimes against persons more than to those 

* Census of 1880 makes it 1487 males. 33 females, 



C0NDITI01S8 OF CRIME. 



443 



against property ; tlie ouvrier (wage- workers) and servile class tend 
most to crimes against property. So far as women are in a con- 
dition of dependence, lead sedentary lives, or are physically weak, 
their pi'oportion of crime is diminished. The impulse toward 
crime was strongest in the period of the culmination of physical 
strength and animal passion, declining after the age of twenty- 
five in the ratio .shown in the diaarram. 



Eelative Tendency to Crime at Different Ages. 



In America the pei'iod of epidemic absence of crime was simul- 
taneous with the like absence of bankruptcy, viz., during the war 
of 1861 to 1865. In many counties in every State the jails were 
continuously empty for long periods, so that it attracted the 
comments of the courts. The war seemed to exhaust the crime 
propensity by its intense demands for slaughter, and all minor 
strifes lacked the passion to fan them into crime. 

M. Quetelet concludes his researches by expressing his " aston- 
ishment at the constancy which we observe in the results which 
each year appear in the records of the administration of justice. 
Nothing, at first blush, ought to be less regular than the march of 
crime. Nothing, above all, ought more completely to defy human 
foresight, than the number of murders which would arise without 
provocation, and in encounters altogether accidental. Neverthe- 
less expei'ience proves that not only murders are annually nearly 
the same in number, but that the instruments which serve in their 
commission are employed in the same proportions. Thus is pre- 
sented to us the same sad perspective of the reappeai'ance of the 
same crimes in the same order, and assuming in minute detail the 
same form. Sad condition of the human race— the portion due 



444 ECONOMIC PHILOSOPHY. 

to the prison, chains, and the scaffold, seems as fixed as the reve- 
nues of the state." * 

In the very earhest condition of society, crime, as distinguished 
from the disobedience, by the slave, of his master's commands, 
could hardly be said to exist. Crime is the offspring of liberty, 
as is also virtue. The tendency of earlier society was to punish 
crime by expulsion or extermination — vindictively. Exile to an 
island is mentioned in Job, and appears in the earliest Roman 
law. Labor in mines, and slavery, took the place, until a recent 
date, which is now held by penitentiaries and jails. Forfeiture of 
goods, and, in a few cases, of land, branding and slitting the ear, 
maiming and torture, crop out in history as expressive of the 
sense of social justice toward crime. Throwing from the Tarpeian 
Rock, casting among lions, the drinking of poison, beheading, 
crucifixion, and burning are prominently broug'ht to view in 
ancient and medieval history, while hanging is recent. 

In administering the death penalty, no account is usually made 
of the value a man may still be capable of conferring on society, 
notwithstanding the commission by him of a very great crime. 
Common rumor reports Shakspeare as having incurred the death 
penalty, for poaching, before he had written any one of his'piays 
or poems. Had the law been executed, in his case, the human 
race would have suffered an immeasurable loss. Jeremy Bentham 
assails vigorously t what he calls the "lavish and unnecessary 
use that is made of the invariable, unequable, incommensurable, 
uncharacteristic, unfrugal, unpopular, uncompensatory, irremis- 
sible punisliment of death." Since his, day the number of crimes 
so punished has been reduced from 134 to 4, of which the latter all 
involve the taking, or endangering, of human life. 

The most successful treatment of crime in modern history, and 

* Note (in French) from Quetelel; 

1826. 1827. 1828. 1829. 

Meurtres en general 241 234 227 231 

Pusil 47 52 54 54 

Pistolet 

Sabre, epee, et autres armes permises 

Stylet, poignard, et autres armes prohibites 

Couteau 

Baton, canne, etc 23 

Pierres 

Hache, fourche, et autres instrumens tranchants ou 

piquans 

Marteau et corps coutoudans non autrement designees 

Strangulations 

En precipitant ou noyant 

Le feu 

Inconnus 17 1 

t " Bentham's Works," by Bowring, vol. 1, p. 186. 



9 


12 


6 


7 


8 


2 


6 


6 


7 


5 


2 


1 


39 


40 


34 


46 


23 


28 


31 


24 


20 


20 


21 


21 


13 


20 


16 


14 


22 


20 


26 


31 


2 


5 


2 


2 


6 


16 


6 


1 




1 




1 



FROM KILLING TO CUBING. 445 

the only treatment that could be called economic or reformatory, 
is the colonization of the criminal, as practiced by England, in- 
directly in America, and directly in Australia, the Cape, New 
Zealand, and Tasmania. Notwithstanding all the efforts which 
philanthropists have made to bring reform out of the penitentiary 
system, the admission of practical pinson workers is that the sys- 
tem almost never produces penitence. It fails to recognize that 
most men become criminals, not because increased restraint and a 
close fitting "jacket of the law " is what they need, but because 
the degree of restraint and jural limitations they are under in 
civilized life, and in a state of liberty, is greater than their na- 
tures are adapted to. A society more relaxed, with fewer re- 
straints and greater self-dependence, is furnished them by colo- 
nization, and, in many thousands of instances, the transported 
convict in a few years becomes the firm friend of law in his 
new home. 

The substitution of the penitentiary so largely for the gallows 
has been due to the increased value of man which arises with the 
growth of capital, the facility of subsisting and employing the 
prisoner, which attends the introduction of machinery and the 
subdivision of labor,* the sensitiveness of the public conscience 
in view of occasional instances of convicting the innocent, and 
the general growth of humanity and regard for human life. 

175. Social Crimes and Insanities. — Quetelet found that 
both the weather, and the seasons, had the same influence on 
crimes, and on insanities. The ancients recognized, or imagined, 
so close an influence, or sympathy, as existing between the moon 
and mental aberration, as to call the latter after the former, 
lunacy, or moonstroke. Absurd as this has been held, modern 
medical science drifts around to the same point, by atti'ibuting 
much mental derangement to malaria or diseased air, and then 
making the symptoms on the 7th, 14th, 21st, and 28th days the 
test as to whether the disease is malarious, since these are merely 
moon periods. Both views may be mistaken, and the latter 
merely a survival, in a scientific fonn, of the earlier superstition. 
On the other hand, it is possible that a force which can lift the 
ocean ninety feet, in the Baj^ of Fundy, may excite tides in the 
atmosphere which have their effects on the mind and will. 
Whether any of these hypotheses be true or not, there is a strong 
analogy between the epidemics of unreason, cyclones of cruelty, 

* In the penitentiaries of Illinois, 17 mechanical trades were taught in 1870, 



446 ECONOMIC PHILOSOPHY. 

and outbreaks of social war, which occur in the world of collective 
humanity, and the storms and tempests of the physical world. 
These epidemics of unreason enlist great masses of men, even mil- 
lions at a time, in their phantasies. As these millions could only 
cohere through the leadership of their noblest and purest minds, 
their most zealous, self-sacrificing, and just men, it is found that 
in these great social upheavals it is the very best men that lead 
in the work of mischief, if mischief it is to be called. The perse- 
cutions of the Christians by the Eoman Emi^erors, the tendency 
of dying persons to bequeath their lands and goods to the church, 
and to overestimate the virtue of charity as compared with indus- 
try, led into the middle or dark ages. The exaggerated value 
which men, during several centuries, attached to the work of 
bringing the whole world under one religious government — a 
fanaticism which had its outcome in a sacrifice of industry to 
monasticism and in a waste of European life and energy upon 
the crusades — in religious persecutions, and in the prosecution 
and burning of witches, and the religious wars, all threatened 
to quench civilization in Europe wholly. There is little doubt 
that these veritable cyclones of human hate, black with all the de- 
structive possibilities of reviving barbarism, were led on by the 
very best, purest, and noblest minds, the most spiritual and self- 
sacrificing, as they were judged at the time, in the world's best cir- 
cles. There is equally little doubt that it was the substitution of 
the spirit of gain, of industry, and of business, caused by the re- 
vival of trade in Europe under the stimulus of the discovery of 
the Indies and of America, which rescued the world from the 
darkness into which it was ever more deeply plunging, by 
bringing back the thoughts of mankind to their secular and ma- 
terial interests. 

Looking at these social tendencies, it becomes evident that they 
go far toward equalizing the ultimate influence of the more suc- 
cessful and the less successful, or of what are usually called the 
good and bad classes of society. The latter drift into the petty 
stage of individual crime, and are eliminated by society through 
some mode of punishment. The former take the lead in great 
holocausts of suffering and slaughter, which equal, in the evil and 
misery they inflict on the world in a single year, or genei'ation, 
all that its combined criminal and vicious classes would inflict in 
a century. At the rate of 240 murders per annum, in France, 
the individual wickedness of that country would in seventy years 
take as many lives as its social and collective fanaticism, acting 



AMBITIOJSf AND GRIME. 



U1 



in the name of justice and jmblic spirit, took in one year of the 
French Revolution,* and it would require four French Revolu- 
tions to make one St. Bartholomew's uight. t 

Roug'hly estimating, as many lives were destroyed in the cru- 
sades I as have been ended in Europe by private murder in 3,240 
years, or since King Sesostris led the armies of Egypt against 
Asia. Yet it would be doing injustice to the leaders in the cru- 
sades to suppose that their motives seemed to them less sacred 
than the absolute righteousness itself. It becomes those who 
have charge of the state, therefore, in its executive, legislative, 
and judicial functions, to observe with a waiy and watchful eye 
the movements of those who have influence, popularity, and 
power, rather than those of the burglars, hall-thieves, and mid- 
night assassins. The latter will be reached by the police and the 
courts, and opinion is united as to their quality. But the great 
upheavals and oppressions, holocausts and sacrifices, civil wars 
aud revolutions, will originate with the public-spirited, patriotic, 
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Eate of Growth of the World's National Debts since 1714, on a Scale op 
81,000,000 TO the Section Line Perpendicularly, and 5 Teaes to the Section 
Line Horizontallv. 



* 17,000. 



t 80,000. 



§ 7,000,000. 



448 ECONOMIG PHILOSOPHY. 

who are intent on making the world better, or on obtaining for 
some of its people enlarged rights and gi-eatei" purity, and for them- 
selves a higher niche in the temple of fame. 

176. The Recent Growth of Debt.— The growth of the 
aggregated debts of the nations which borrow in the money 
market of Europe forms the unsettled problem in modern politi- 
cal finance. Since 1714 the world's national debts have multi- 
plied fifteen-fold, viz., from 1,500 millions of dollars to 26,970 
millions.* Measured by half decades, the rate of increase appeal's 
in diagram on page 447. 

Mr. Adams t says of a loan to government : ' 'Its full effect is to 
check further industrial expansion, and this it does by turning 
the energy of the country into other channels." Yet Mr. Adams 
says that ' ' employed capital will not be placed at the disposal of 
the state, and that a public loan at normal rates of interest can 
not exert any decided influence upon established industries, since 
there is no motive presented to one whose capital is well invested 
to withdraw any part of it from its accustomed employment, and 
place it at the disposal of the state." 

Mr. Adams infers that it will take the fund that would have 
gone to new enterprises, because no man having a fund well in- 



* The Iron Age, referring to an address to the National Board of Trade by Mr. 
Price, quotes Lord Derby as haviflg predicted that European nations must repudiate. 
The annual burden of $800,000,000 of interest is a load they can not carry. It continues : 
" Spain, Portugal, Austria and Greece are bankrupt ; Russia and Italy are without 
credit; and the great States of Great Britain, Prance, and Holland are exhausting every 
measure of taxation to maiHtain solvency and credit. 

" To the constantly growing sum of obligations which constitute our credit system 
must be added an enormous total of public indebtedness contracted by minor divisions 
of the state, corporations, firms, and individuals. For our own country the showing is 
assumed to be about as follows : 

Present national debt, December 1, 1887 $1,675,816,660 

State 226,597,594 

County and municipal 821,486,447 

Railway 4,163,640,144 

Banking 4,581,706,203 

Private banking 1,500,000,000 

Record 6,000,000,000 

Mercantile 3,000,000,000 

Individual, otherwise than above 6,000,000,000 

Aggregate $27,969,247,048 

" This total is more than one-half the entire census valuation of 1880. If our popula- 
tion is 60,000,000, it means a per capita indebtedness of $465, or more than the average 
income of the family in Massachusetts." 

Singularly enough, while some are distressed by these predictions, Prof . MacLeod, 
of Cambridge, counts all this volume of debt as " currency," and therefore " means 
of payment," as well as principal to be paid. 

f "Public Debts," p,C2. 



EFFECTS OF DEBT. 449 

vested in established enterprises would see sufficient profit in it. 
But, as we have repeatedly seen, the fund that goes into new enter- 
prises demands as a rule a far higher rate of interest than is 
earned in established enterprises. Capital migrates only under 
the inducement of higher rates of profit. If it will not abandon 
its established enterprise, in which profits are fast descending to 
ordinary rates of interest and rent, and wherein perhaps they are 
fifteen per cent, per annum, why should it be withdrawn from 
the prospective venture in which 50, 100, or 500 per cent, are 
looked for ? 

Mr. Adams says : " If filled at all, it will be filled from that fund 
of free capital which would otherwise have been invested in new 
industries." On the contrary, the class of persons who buy gov- 
ernment bonds are at the very opposite pole of the industrial 
world from the class which invests capital in new ijidustries. The 
latter are the class full of ideas, but without a surplus, generally 
borrowers of the means they invest. The lenders to government 
are a class seeking safety by avoiding the risks of industrial iu- 
vestinent, either because their capitals are too large to admit of 
their superintending industrial enterprises, or, as in the case of 
women and salaried employees, they feel too distrustful of their 
own judgment to venture. 

Prof. Adams' suggestion of the effect of loaning to govern- 
ments overlooks the fact, also, that no person could be deterred 
from investing in any new enterprise by the fact that he had al- 
ready invested in bonds, since the bonds are as convertible as 
money. The ready answer of those who solicit him to invest, 
if he should object that he had already invested his money in 
government bonds, would be, ' ' That is an aid rather than an 
obstacle, as we will take your bonds as even better than cash, for 
they will di'aw interest until we wish to use them, and whenever 
we wish to use them they are as good means of payment as 
money." 

The confusing element, in tracing the economic effects of loans 
to government, is that the bond which is purchased is in the 
economic sense "'money," or "inflation," as truly as if it were 
an additional issue of paper money. Hence, by its effect on prices 
generally, it has the same effect to stimulate new enterpi'ises in- 
stead of discoui-aging them, which all additions to the volume of 
the currency have. 

Mr. Adams * fully explains this use of government bonds as in- 

* "Public Debts," pp, 55-7. 



450 ECONOMIO PHtLOSOPBY. 

ternational means of payment. He shows that when France, as 
a means of paying the German indemnity, called for a loan of 
2,000,000,000 francs, more than four times that sum were offered. 
About two-thirds of the sum offered were offered from outside of 
France, one-tenth of it from Germany itself ; that in fact it was 
only a readjustment of credits which did not involve any drain 
of capital from the industries of France, but only an addition of 
new "international values " to the security market. 

Mr. W. L. Fawcett * regards it as inconceivable that such an 
increase in the volume of national debts should have any other 
outcome than early general bankruptcy among all the weaker 
nations. 

Mr. Adams cites the attempt of the foreign bondholders to con- 
quer Mexico and enthrone Maximilian, which failed, and the 
later successes of English bondholders in Egypt, of French bond- 
holders in Tunis, and the abject subservience of Peruvian politics 
to foreign bondholders. 

He also holds f that it is the fact that the possessing or 
property-owning class, the moneyed interest, has captured the 
machineiy of government that ' ' affords such guarantee as exists, 
that moneys borrowed by government will be repaid." 

Here again Prof. Adams clings to the " debt " idea and forgets 
the " intei'national value" function, or currency office, which he 
explains so fully in the case of the French debt. The national 
creditor not only does not cling to the notion that his debt will 
be paid, but in the case of the debts of most of the governments 
of Europe the notion does not exist. All the European debts are 
interminable. They never fall due. They are mei'ely permanent 
savmgs banks in which the people may make their deposits at 
interest when not needed, and when needed may, by sale of the 
bond, draw out their deposits. Of all financial investments they 
are that in which the people may most nearly ' ' eat their cake 
and have it left." If the govei'nment, by paying ofi' its debt, 
deprives the people of the privilege of lending to it, they take 
their money to the savings banks, or deposit it in the national 
banks, to be loaned out by them to merchants and manufacturers. 
In this case it is, usually, the substitution of a social loan of a 
narrow sort for a social loan of the broadest sort. For, all surplus 
uninvested funds have to be loaned in some way. Wherein lies 
the danger of lending them to the collective people through a 

* " Gold and Debt." + "Public Debts," p. 9. 



THE DEBT PUOBLEM. 4.51 

national debt, as compared with lending them to the banking 
class ? We do not present these suggestions as solutions. The 
debt question is the nearly unexplored problem in existing 
political economy. The facility with which governments borrow 
money is pushing tliem onward toward a more and more 
socialistic order of society. The tendency is toward a rapid 
increase of the enterprises, such as schools, telegraphing, internal 
improvements, of which the state will take chax'ge in the interest 
of production of commodities. The socialists demand that it 
shall take charge also of the disti'ibution of wealth, of interest, 
rent, and profits. Meanwhile, the novel fact in finance is that in 
the manufacture of debts governments are at the same time sup- 
plying means of payment, if not in the full degree asserted by 
Prof. McLeod, at least in the full degree in which the debt so 
issued is readily negotiable. The debt is money. The paradox 
is orthodox. 

Socialism rails against intei'est, yet seeks nationalization of 
land, raihvays, mines, manufactures, schemes whose carrying 
out involves increase of debt, and hence of interest. It pro])oses 
to confiscate rents, yet thrives upon that rapid increase of town 
population, relatively to rural, which chiefly swells rents. 

The modern state is a new factor in finance. Once the state 
conquered and plundered — now it borrows and pays. Then it 
was the General. Now it is the Banker. Poets loved the former, 
for verse can deal wnth slaughter, but not with profits, rent or 
interest. When the people prosper the poets are in pain, but 
the economists smile. Tennyson complains about the fleet, 
and Lowell declares that France and America are nursing little 
men. Aristophanes anticipated both "Gresham's Law" and 
Tennyson's and Lowell's complaint, by twenty centuries, in these 
lines : 

" Oftentimes we have reflected on a similar abuse 
In the choice of men for office, and of coins for common use ; 
For your old and standard pieces, valued and approved and tried, 
Here among the Grecian nations, and in all the world beside, 
Kecognizcd in every realm for trusty stamp and pure assay, 
Are rejected and abandoned for the trash of yesterday ; 
For a vile, adulterate issue, drossy, counterfeit and base, 
Which tlic traffic of the city passes current in their place ! " 

—{.Aristophanes, " Frogs," 891-898 ; Frerc's Translation. 



CHAPTER XII. 

TAXATION. 

177. Origin of Taxes. — Inscriptions, on some of the oldest 
monuments of Egypt, indicate that tribute was levied on con- 
quered tribes ; enforced contributions were obtained from prov- 
inces, to sustain the cost of the funeral honors due to the sacred 
ox ; spoil in gold and silver, and in various products of the land, 
was wrung from subject tribes, in a manner that brought the 
methods of taxation into close resemblance to the plunder prac- 
ticed in war. So, American merchants, after a short residence in 
China, have returned from that country, with the fixed impression 
that thieves were licensed by the government. So little resem- 
blance exists between the collection of taxes there, and in 
Amei'ica, that tliey had not recognized the tax-collector in the 
Chinese depredator, but supposed him to be literally a "licensed 
thief." This would be the natural effect of that system of 
"farming the revenues," as it is called, which, from the very 
dawn of time, has been the prevailing system of levying taxes in 
most parts of Asia and Africa. The revenues are "farmed " when 
the governments rent a province, or district, to the chief satrap or 
governing officer thereof, for a stipulated annual sum, leaving 
him to collect as much more as he may, or as the district will 
bear without rebellion, by such methods as he finds most con- 
venient. Usually the satrap or governor sub-lets to smaller 
farmers, and these to others, and all collect partly upon the 
standard of ancient customs, and partly according to ' ' what the 
district will bear," le., what the people will pay without mur- 
muring or rebellion. 

From the system of "fai^ming the revenues," which is but one 
I'emove from licensed robbery, the first advance toward equity, 
among commercial and trading nations, is to a fractional rate one- 
half, fifth, eighth, or tenth of certain specified products of the soil. 
This is the system described in the Old Testament as operative 
among the Hebrews, and, combined with certain elements of the 
system of farming the revenues, it still prevails in Turkey. 

In India, by the institutes of Manou, a tax of one-sixth, one- 



ECONOMIC PHILOSOPHY. 453 

eighth, or one-twelfth was levied on grain, one-sixth on sales of 
goods, one-twentieth on sales of lands, and one-fifteenth on the 
net annual revenue of cattle, gold, and silver.* Traces of a poll- 
tax (an equal sum on each person) also are found.f Heavier 
duties, even at this early date, were levied on the importation of 
silk fabrics than on the raw material, \ in order that the wages and 
profits of weaving and dyeing silks might be secured to the Hin- 
doo artisan. On emergency, in India, a right between our right 
of military seizure and of eminent domain existed, to take one- 
fourth the property of the subject as a tax. 

In Egypt, according to Brugsch, certain inscriptions, in the 
reign of Usurtasin, indicate that taxation was levied on prov- 
inces in proportion to income, but whether proportionate to 
the income of the province, or of the people, is not clear. 

Among early nations the government is often itself a trader, as 
in Tyre, Sidon, Phenicia, and Carthage. In such countries, as well 
as in those wherein the government is the sole land-owner, as in 
modern India, and in those wherein the ruling families are the 
chief landlords, as in England in the feudal period, taxation as- 
sumes the form of rent of land. In England, in the feudal period, 
this rent was paid mostly in military or personal services, and 
taxes in money were little known. 

Hence Blackstone treats the old feudal forms of revenues as 
the *' ordinary revenues " of the crown, while excise and customs 
duties, and all the ordinary modern forms of taxes, are classed as 
" extraordinary revenues," which do not belong to the crown of 
strict right, but require to be granted to it by a special act of par- 
liament. This is the origin of the theory that "taxes," in the 
modern sense of the word, are only grantable by the representa- 
tives of tlie people. These are in England the House of Com- 
mons, to whose powers, in the main, the lower House of Congress, 
and of our several State legislatures, succeed. Hence arises the 
practice in England of making up an annual budget, or account 
of revenues and expenses, on the presentation of which an op- 
portunity is afi'orded to criticise government policies, and to vote 
upon or reject them by making a modification or change in them 
a condition of gi^anting the budget. Tliis budget is supposed to 
be presented by the premier, or actual head of the government, 
whose function it is to govern, while tliat of the queen or kiiig is 
mei'ely to reign. By this maeliinery a division is ert'ected between 

* Marigny. + De Parieii. % " Government Revenues," by Roberts, p. 31. 



454 ECONOMIC PHILOSOPHY. 

the dignity of the government, which rests in the crowned head, 
and the wisdom or poUcy of the particular persons conducting it, 
which centers in the premier, who may hold either or several of 
the chief cabinet portfolios, viz., he may be first lord of the 
treasury, chancellor of the exchequer, secretary of state for 
foreign affairs, etc. 

Out of these customs have evolved our own constitutional prin- 
ciples, that measures relating to the revenue must originate in the 
House of Representatives and not in the Senate, and that the 
President and several heads of departments shall make up a 
budget, or annual report to Congress, of the condition of the finan- 
ces and business of their several departments, at the opening of 
each session of Congress. 

In Rome there were three systems of voting, one of which, that 
by centuries, divided the people into six different grades, accord- 
ing to wealth and the number of their retainers and dependents. 
It then gave them a power in determining public questions, es- 
pecially of peace or war, proportionate to their wealth and mili- 
tary resources, and compelled them to contribute to the bui'dens 
of war in like propoi'tion. Gibbon says: "History has never 
perhaps suffered a more irreparable injury than in the loss of the 
curious register bequeathed by Augustus to the Senate in which 
that experienced prince so accurately balanced the revenues and 
expenses of the Roman Empire."* Guizot and Wenck estimate 
the annual tributes, deiived by the Roman Empii'e from subject 
nations in the time of Augustus, at not less than $200,000,000, 
Asia paid $31,000,000 a year, Egypt $11,000,000, and Carthage a 
war indemnity of $20,000,000 spi-ead over fifty years. 

Julius Caesar laid duties of from an eighth to a fortieth on im- 
ports, and Augustus introduced the excise or internal tax on 
sales, legacies, successions, and inheritances, and the license tax 
on occupations, even down to petty retailers and panderers to vice. 
The system of farming the revenue prevailed, and in the New 
Testament we get a graphic view of the contempt and hatred felt 
for the tax gatherer. In Gaul, the taxes amounted, according to 
Gibbon, to $45 a head, and were in part a land and in part a poll- 
tax. This Gibbon calculates at four times the average rate of 
French taxes in his day. Throughout the empire mines and 
quannes, salt, fisheries, and forests were subject to special charges, 
and tolls were collected on post-roads and bridges. 

* Gibbon's " Decline and Fall," vol. i. p. 187, 



EQUALITY IN TAXATION. 455 

Constantine in the Eastern Empire practised the system, which 
continues in Turkey to the present day, of taking a share of the 
px'oduce of tlie land. A sum was apportioned to a province, and 
this was divided among the population, until it became a definite 
sum per head to each. 

China has, from the dawn of time, taxed the land from one-fifth 
to one-third its gross product. Transit duties, next to the land-tax, 
reap the largest retui'u. Then follow taxes on stores, markets, 
corporations, salt, on the manufacture of porcelain, silk, and var- 
nish, on the sale of offices and degrees, on rank, and finally duties 
on imports and exports. In India, a land-tax or rent is collected 
by the government as the national landlord, amounting to a half 
or third of the annual produce, while a very heavy tax, 2s. Qd. per 
pound, is levied on salt. This salt-tax has occasioned the habit, in 
the people of certain districts, of eating the dirt which contains 
the salt, as it is dug from the earth, in order to escape the revenue 
tax collected on it, under very harsh penalties if it is refined. 
This dirt-eating system in its turn has produced peculiar diseases 
of the digestive organs of the ryots who participate in the habit. * 

178. Standards of Equal Taxation. — Taking society as it 
has existed in all ages, the chief, and almost the sole, object of 
taxation has been to provide an income and means of expendi- 
ture for those engaged in administering the government, and for 
the maintenance of their armies and police. The chief motive of 
those engaged m administering the government, in earlier peri- 
ods, was to maintain their own power, and, as the securest mode 
of doing this, they gradually gave more and more attention to 
administering justice between citizens, promoting the arts, intro- 
ducing learning, giving an intelligent direction to superstition, 
and ameliorating the tendencies of their savage populations 
toward violence and fraud. At last, in modern times, education, 
internal improvements, the promotion of industries, the care of 
the poor, defective, and delinquent classes, the intei'pretation and 
adjudication upon contracts, perfecting means of transportation, 
including highways, canals, steamship lines, and stimulating dis- 
coveries and inventions, have become leading objects of govern- 
ment. Even the coercive administration of justice has become 
secondary in importance, and cost, to the means taken to further 
industr^^ and general enlightenment. 

Theories of taxation have varied with these changes in its 

* Seymour B-eay's " Spoliation of India." 



456 ECONOMIC PHILOSOPHY. 

objects. So long as taxes were laid as a means to keep the gov- 
erning classes in power by military force, the chief motive held 
in view would be to levy them where the most revenue could be 
collected, with most ease, at least cost. When the state became 
itself engaged in the work of production, as France is to-day in 
the manufacture of tobacco, and as the Phoenician kings were 
engaged in foreign commerce, taxes or prohibitions would be 
imposed on all rivals in the same trade. The English govern- 
ernment maintains, in this spirit, a monopoly to itself of the 
opium production in India. 

When theories of equality began to be broached by the French 
and English philosophers of the eighteenth century, they natu- 
rally concentrated their efforts on some plan of ideal equality in 
taxation. Here, however, arose endless themes for disioute, ow- 
ing to differences of judgment as to whether possessions, per- 
sons, incomes, consumptions, occupations, processes, descents and 
inheritances, contracts, profits, acres, or productive or idle capi- 
tal should be equally taxed. Each of these forms an independ- 
ent standard of ' ' equality in taxation " wholly irreconcilable, in its 
practical workings, with all the others. One will say it is equal 
taxation to tax each man in proportion to the value of the prop- 
erty he owns. This is the basis or standard, at which all the 
state, coimty, and local taxation aims, in most of the states of the 
United States, but not in the General Government. The objec- 
tion to this is that capital that is earning nothing, and that per- 
haps is in the way to be swallowed up by losses, is so taxed as to 
hasten the ruin of its owner, while men who are making large 
incomes, but expending them as fast as they make them, are not 
taxed, though they are enjoying far more of the world's wealth 
than those whose possessions are considerable, but whose incomes 
are small. Hence, the demand for the equal taxation of posses- 
sions is met by the counter-demand for the equal taxation of in- 
comes, or of expenditure, or of consumption. Another will say, 
tax manufacturing processes equally, according to the product 
turned out. Another will conscientiously think it equal, to tax 
occupations equally, according to their earnings. 

Still another will deny that taxation should be equal, and will 
allege that taxation should rest more heavily on superfluities, 
luxux'ies, and vices, e. g. , on tobacco, spirituous liquors, licenses 
to sell liquor in drinking saloons, on shows, brokers, money lend- 
ers, peddlers, usurers, on people who keep dogs, silks, diamonds, 
carriages, many servants, large retinues, etc. One holds that 



IDEAL OF TAXATION. 457 

unoccupied land should be specially taxed to punish the wrong 
to society of keeping- it out of the market. Ricai'do holds that to 
tax any form of capital is a discoui-agement to labor, since, in his 
view, capital is the wage-fund from which labor must be paid, 
and, intrinsically, all capital is unproductive except as it is made 
a means of employing labor. 

In this conflict of theories, first, as to whether taxation should 
be equal at all, and, secondly, what element or aspect of man 
should be selected in estimating equality, there could be no 
other feasible course, open to governments, than to combine 
taxation on nearly all these conflicting bases in the degree that 
a national legislature, or bureau of taxation, would be able to 
agree upon. This is what is meant by saying that taxation is a 
practical question, or, largely, a compromise between conflicting 
theories. Obviously, nothing would be more despotic than to 
seize upon one only of these standards of equality as being the 
true and absolute standard, as, for instance, " incomes,'' when as 
many persons favor an equal tax on every person, or equality ac- 
coi'ding to the value of one's possessions, or taxation according to 
consumption, or the taxation of vices, luxuries, monopolies, etc. 

179. An Ideal Theory of Taxation. — Adam Smith has 
laid down four rules which are supposed, by some, to embody a 
system of taxation which ought to be satisfactory to every mind. 
They are good rules, relatively to certain others which would be 
worse, and very poor rules relatively to the actual practice of 
many governments, which is better than these rules. We shall 
examine them consecutively : 

" 1. The subjects of every state ought to contribute to the support of the government, 
asnearly as possible in proportion to their respective abilities ; that is, in proportion to 
the revenue which they respectively enjoy under the protection of the state. In the 
observation or neglect of this maxim consists what is called the equality or inequality 
of taxation." 

The opening words begin by tlie assumption, so common among 
free traders, that only " the subjects of a state " ought to contrib- 
ute to the support of its government. This is to ignore, at the 
outset, a cardinal point in the protectionist experience, that not 
only the subjects of a state, but aliens who seek to do business or 
sell their wares within its borders, or in any way to get the bene- 
fits of its markets and scale of values, ought to, and under pro- 
.tectionist duties do, in many cases, contribute to the support of its 
government. The protectionists claim to be able to tax an inter- 
national constituency of producers and consumers on all interna- 



458 ECONOMIC PHILOSOPHY. 

tional trade, i. e., trade between citizens of different nations. 
Whether they do so or not will be fully discussed in our next 
chapter. Meanwhile, the opening passage of the above rule is 
defective in ignoring this important fact, which limits the accept- 
ance of the rule to a class of closet theorists who have never yet 
given a fiscal policy to any nation in the world, and doubtless 
never will. The two recommendations that follow are that sub- 
jects contribute in proportion to their respective abilities, and in 
l^roportion to what they enjoy. Their abilities to enjoy will be 
measured, by one man, by their possessions, and by another, by 
their income. A tax on the first is a tax on capital, while a tax 
on the second is a tax on income. Thus the single word ' ' abil- 
ities " covers two very unlike modes of taxation. But both are 
distinct from "what they enjoy," for this last again is measured 
by expenditure, and by intellectual capacity to obtain enjoyment. 
To tax expenditure is to tax consumption, ostentation, and lux- 
ury. So far as we tax consumption, it becomes very nearly in 
effect a tax on persons, for the poor man with a large family will 
consume as much, directly, as the rich man with a small family. 
Taxing ostentation and luxury is taxing that very dispersion of 
wealth, and breaking up of hoards and estates, in which the pro- 
fessed champions of the poor are so deeply interested. For, nothing 
tends so directly to the dispersion of wealth, by the richer among 
the poorer, as most forms of luxurious and ostentatious living. 
Thus Dr. Smith's first prescription divides itself into seven, viz. , 
into taxes on capital, on incomes, on expenditure, on capacity, 
on consumption, on ostentation, and on luxury. Tax-gatherei^s 
can not travel far together, on a road that forks so often. Dr. 
Smith's next precept is : 

" 2. The tax which each individual is bound to pay ought to be certain, and not arbi- 
trary. The time of payment, the manner of payment, the quantity to be paid, ought 
all to be clear and plain to the contributor, and to every otiier person. The certainty 
of what each individual ought to pay is, in taxation, a matter of so great importance 
that a very considerable degree of inequality, it appears, I believe, from the experi- 
ence of all nations, is not near so great an evil as a very small degree of uncertainty." 

This might seem self-evident to a man in a closet, but it does 
not agree with any experience we have of society, and it is not of 
the least practical importance to either the statesman or the tax- 
payer. 

The tax to which each individual is subjected, in every relation 
of life other than citizenship, is both uncertain and arbitrary. The 
degree in which he is taxed in his strength and vital force, first, 
to support himself, then to make for himself a good name and 



WHO PAYS THE TAX. 459 

estate among his fellow-men, then to maintain, provide for, and 
conduct his family, are all uncertain, unequal, and often very 
arbitrary, and of a kind to involve absolute heroism to endure. 

Out of these social taxes, howevei', come all social heroisms and 
nobility. Whei'e then in natui'e do we get the basis for assuming 
that a social state, which is full of social inequalities, and of un- 
equal bui'dens on every hand, and wherein the prime duty of the 
virtuous is to help carry the derelict and delinquent, wherein also 
the wise must help bear the foolish up above and out of their 
folly, and wherein the strong must be taxed often to their full 
ability to secure the survival of the weak, the healthy of the 
diseased, and the competent of the incompetent — how is it that 
when this unequally-yoked -together mass of citizens are conglom- 
erate into a state, there must perforce suddenly spring out of this 
compost heap of inequalities a fair, white, ideal flower, which 
shall embody in its purity a principle on which no two minds can 
agree ? To the man that desires nicotine this flower shall contain 
nicotine and no other essence, to the man who desires cocaine it 
shall contain cocaine, and to the man that wants lavender or rose 
it shall be lavender or rose. 

But neither the statesman nor the citizen, in fact, cares or needs 
to know who pays the tax, any more than the citizen needs to 
know what particular Sing-leng-foo in China cultivated the tea 
which he sips, or what negro in Georgia hoed the cotton which 
he wears, or what were the features of the sheep whose wool 
adorns his back. . The question, who pays the tax ? is often a 
wholly insoluble conundrum to the economist, the tax being 
passed on, in its incidence, from one hand to another, until its 
exact incidence is lost in the tangled network of social causes and 
effects. But so are all other costs of living lost, if we attempt to 
follow them, in the same tangled network. An English parlia- 
mentary committee on local taxation, presided over by one of 
the foremost of England's practical and theoretical economists, 
George J. Goschen, rejjorted in 1872 that they could not tell, and 
no man could possibly find out, whether the tax on the occupier 
of houses was paid by the tenant or the owner of the land.* But 
shall no houses be rented until we find out whether the landlord or 
tenant pays the occupier's tax ? Mr. Mill is in an absolute mud- 

* The report says (" Goschen on Local Taxation," p. 178) : "That your committee 
have examined mauy witnesses, and received at their hands very conflicting opinions 
as regardsthe proportion in which the burden of rates at present falls relatively on 
owners and occupiers," 



460 EGONOMIO PHILOSOPHY. 

die, as to whether taxes on exports are paid by the foreign con- 
sumers or by the domestic producers of the exported product, but 
inchnes to the opinion that they are paid by the foreign consum- 
ers, and that a nation may often greatly benefit its own trade by 
taxing its exports.* 

The very able economists, who framed the constitution of the 
United States, must have differed toto coelo from Mr. Mill on this 
point, or they would not, with such unanimity, have prohibited 
duties on exports. Indeed, if any considerable portion of the 
people of the United States should think as Mr. Mill does on this 
point, it would be but a very little while before the Constitution 
of the United States would be amended, and a duty on raw cotton 
imposed. We do not mean to express a difference from Mr. Mill 
as to duties on exports, but only to point out that where, in rela- 
tion to so many taxes, it is impossible for statesmen to agree as to 
where the incidence of the tax actually rests, yet the tax produces 
the revenue, and the citizen prospers, the question where it rests 
becomes a mere philosophical and metaphysical subtlety, of no 
more practical importance than the question where the ultimate 
responsibility for human conduct rests, or where the human will 
begins, or where in economics the cost of production begins — 
whether with the final process, or with the production of the im- 
plements, and if so whether production shall be deemed to include 
invention of the implements, in which case the effort to compute 
the cost of producing a bushel of corn would carry us back to the 
beginning of the world. Such subtleties may be, and largely 
through Mr. Mill's infiuence are, raistaken for economic science, 
but they have nothing to do with it, but belong to the widely dif- 
ferent domain of metaphysical gymnastics. 

Students must gradually learn the distinction, between the men- 
tal daze that comes from reading propositions like those of Mr. 
Mill, which begin with a " let us suppose," then carry you through 
the meshes of a tangled but non-existing hypothesis, and finally 
dump you with a triumphant " thei'efore " in a quagmire of con- 
clusions, which agree only in being at war with the existing sys- 
tem of things, whatever it may be — and political economy, at 
least as taught by the historical school. Dr. Smith's third rule is : 

* Book V. ch. 3 (p. 574, Loughlin's ed.) he says : "By taxing exports we may, in 
certain circumstances, produce a division of the advantage of the trade more favorable 
to ourselves. In some cases we may draw into our coffers, at the expense of foreign- 
ers, not only tlie whole tax, but more than the tax ; in other cases we should gain ex- 
actly the tax ; in others, less than the tax. In this last case a part of the tax is borne by 
ourselves ; possibly the whole, possibly even, Jis we eball show, more than the whole," 



SUPPBESSIJYG A PRODUCTION. 461 

" 3. Every tax ought to be levied at the time, or in the manner, in which it is most 
lilcely to be convenient for the contributor to pay it. Taxes upon such consumable 
goods as are articles of luxury are all finally paid by the consumer, and generally in a 
manner that is very convenient to him. He pays tliem little by little, as he has occa- 
sion to buy the eoods. As he is at liberty, too, either to buy or not to buy, as he pleases, 
it must be his own fault if he ever suffers any considerable inconvenience from such 
taxes." 

Tliis rule emphatically and tlirouglioiit contradicts the last. For 
the most convenient time and manner in which to pay a tax is 
when we pay it without knowing it, whether we are the producers 
of goods, workuig for a profit, and paying- the tax in order to get 
them into a particular market, or whether we are consumers and 
buying the product. It is not true that taxes upon such consum- 
able goods as are articles of luxury are all finally paid by the 
consumer, or that a different rule prevails for articles of luxury 
from those that govern other products. Indeed, there can be no 
distinction in economics between luxuries and necessaries, as may 
be illustrated by the very simple fact that in civilization clothing 
is necessary, in Central Afi'ica it is a luxury. In Uganda, more- 
over, bamboo is necessary, and most kinds of money have little 
or no value. In civilization bamboo is nearly worthless, and 
money is constantly necessary. Dr. Smith's fourth rule is : 

"4. Every tax ought to be so contrived as both to take out and keep out of the 
pockets of the people as little as possible over and above what it brings into the public 
treasury of the state." 

This rule in practice contradicts the second rule. For the sec- 
ond rule assumes there are many taxes, concerning which it is 
true that the quantity each person pays, and even the question 
which of several persons pays, is uncertain, in the sense of un- 
known, i. e., is not capable of being known. Now, where we can 
not know who pays the tax, it is obviously fruitless to try to 
measure the proportion of the amount paid which does not go 
into the treasury, against the amount that does, so as to make the 
ratio of two unknown quantities to each other the gauge by 
which to determine the justice of a tax. 

Again, there may be great difference of judgment among men, 
as to which of two modes of tax does take out, or keep out, of the 
pockets of the people, most money relatively to what it brings into 
the public treasury of the state. 

Great Britain taxes the importation of leaf tobacco 3s. 6cZ. ster- 
ling, or 87 cents per pound. To prevent this import duty from 
causing Irish and Scotch farmers to cultivate tobacco, as they 
could do at an enormous profit, by reason of the duty thus ini- 



462 ECONOMIC PHILOSOPHY. 

posed on the foreign article, the government pi-ohibits absolutely 
the domestic production, making it criminal to cultivate the leaf 
anywhere in Great Britain. This suppression of the domestic 
pi-oduction is supposed to have the eilect to cause the entire sum, 
by which the price of tobacco to the consumer is increased, to go 
into the treasury, i. e., no part of it goes to any domestic producer. 
But lo ! to accomplish this result, there is kept out of the pockets 
of the people, not merely the amount of the tax paid, but the en- 
tire profits of the possible domestic production of the leaf. No 
one can tell how peculiarly the climate of Ireland might have 
proved to be adapted to the culture of tobacco, if it had been al- 
loAved. It might have proved to be as much superior to any other 
point in the woi'ld, for the culture of the leaf, as the Southern 
States are for the culture of cotton. In that case Ireland could 
have produced the tobacco crop of the world, and, instead of 
famine and decline, might have maintained a population of nine 
to twelve millions of people. 

Yet we are told that the signal merit of this tobacco tax is, that 
it takes not a penny from, the pockets of the people, that does not 
go into the treasury. In fact, by suppressing a domestic produc- 
tion, it keeps out of the pockets of the people the profits of a pos- 
sible national industry, the value of which no man can compute. 

180. The Search for the Incidence of Taxation and of 
Specific Taxes. — By the incidence of a tax is meant the fall, 
" blow," or deduction from wealth, which it efi'ects on a particular 
person, and this involves the defining of the final person upon 
whom the tax rests, and beyond whom its burden does not go, and 
has no effect. It has never occurred to the writers on this subject, 
that if the ultimate incidence, or final deleterious effect, of a tax 
or burden can be defined, much more by parity of reason ought we 
to be able to define where the benefits of production, or of a new 
aid to production, stop. We ought to be able to point out the ex- 
treme outward j)erson upon whom the beneficent effects of the 
invention of printing, the discovery of America, or of gold in 
California rests. A tax, considered as a diminution of production, 
.can hardly be measured until we can assign limits to the effects 
of aids to production. For, peradventure, the tax itself may be 
an aid to production, and in that case it has no incidence, properly 
speaking, since its supposed "blow "is converted into a caress. 
In discussing Adam Smith's ideal theory of taxation, we else- 
where point out that standards of equality may be as numerous 
as the persons who propose tliem. • 



WFIEK ARE TAXES " EQ UAL " .? 463 , 

A would think it equal that B pay the same as C. This calls 
for a poll tax. In interior or barbarous races, where no capital 
exists, a poll tax would be as equal as any other. B thinks it 
equal, that A and C pay according- to what they possess. This 
calls for a tax on capital, or savings, or principal. This is equal 
in as far as capitals and incomes are equal. C thinks it equal that 
A and B pay according to what they earn or receive. This calls 
for an income tax. Income taxes are equal wherever incomes 
are equal. D thinks it equal that A and B pay according to what 
they enjoy or expend. This calls for a tax on consumption or 
rate of living, which is an equal tax as to all who live at an equal 
rate of expense. E thinks it equal, that A and B should pay taxes, 
at the point where it will, incidentally, cause industries not pre- 
viously possible to become equally possible to both A and B, 
whereby they can be supplied with the means to pay the tax and 
make a profit besides, so that by paying a tax of say five they are 
l^enefited to the extent of fifteen. This calls for taxes for im- 
provements, schools, lights, sewers, and protection to domestic 
industry. These are equal except as to such persons as do not 
intend to live by industry, and who have therefore no interest in 
its j)rotection or defense. F thinks it equal that A and B should 
be taxed according' to their respective utility to the community. 
If A is rendering valuable service, say in teaching school or in- 
venting machinery at small pay, or in introducing capital into 
new avocations which will be presently unprofitable, but ulti- 
mately of great public benefit, and B is getting high profits out 
of a business deleterious to the general welfare, as gambling, sell- 
ing spirituous liquors, or prize-fighting, lotteries, bull-baiting, or 
vice, then B should be taxed a sufficient sum to at least make A's 
means of living as secure as his own, and this sum should be paid 
over to A for teaching school, or inventing machinery, or invest- 
ing capital, or otherwise working for the common good. 

Mr. Mill holds tliat true equality of taxation consists in equality 
of sacrifice, or suffering, in paj'ing the tax. But this is chimerical, 
as those who have abundant means can not be made to suffer by 
any payment whatever. Dr. Smith holds that taxation should be 
equal according to the ability of each to pay. But who shall 
define ability to pay ? 

Mr. Mill was strongly of the opinion that the increase of value 
in laud, growing out of increased public ap^jreciation, should be 
taxed. But if so, should the state compensate for the decrease of 
value ? and why should the rise in land, more than the rise in 



464 ECONOMIC PHILOSOPHY. 

stocks, in good will, or in personal popularity and reputation, be 
taxed ? Labor has as little to do with causing a man to grow in 
public favor as with causing a lot of land to grow in price. 
Horace Greeley was wont to say : ' ' Popularity is a happy acci- 
dent of life, and political preferment is an affair of luck." Whj'' 
should they not be taxed as well as the unearned increment of 
land ? 

If a particular kind of business be taxed, on the ground that it 
is inimical to public intei'est, a half or third of the persons that 
would else engage in it go out of it, thus enlarging the ratio of 
customers to those that remain, and hence removing from them 
the tax. Many sellers of liquors prefer a high tax on liquor, as 
it dignifies their calling and makes them collectors of revenue, 
and therefore agents of the state. When the increase in their 
monopoly of the custom reimburses to them the effect of the tax, 
upon whom does the tax rest ? The customer will declare that 
he is not taxed, as he gets his goods of as good quality and at as 
low a price as before, but from fewer merchants. The persons 
who go out of the business can not be said to pay the tax, since 
they go into other kinds of business and are not in the line from 
whence the tax comes. The liquor seller who remains certainly 
does not pay it, as the increase of custom resulting from driving 
his competitors out of the business has reimbursed him. Thus, 
though the state treasury has certainly received an increase of 
revenue, no person can be proven to have sustained the actual 
burden of this increase. 

So suppose a tax be laid upon land, with the effect to lessen the 
profits of investing capital in it. The number of competitors for 
its ownership diminishes, the same capital acquires more of it, 
and virtually the monopoly of those wdio choose to invest in it 
increases, with a corresponding increase in their i^rofits, in the 
same manner as we have indicated in the case of tax on an occupa- 
tion. But with this result, — on whom has the tax fallen ? 

Mr. Mill holds that, in taxing incomes, all that portion of the 
income which is laid by as savings should be exempted, since to 
tax savings is, he says, to condemn prudence. But, in such a 
case, the tax would rest on that which a person can not afford to 
save, but needs to consume. This is in conflict with his other 
principle that the tax should be so distributed as to equalize the 
sacrifice. It certainly involves a far greater sacrifice, to tax a 
man out of what he needs to expend for his support, than to tax 
him on the surplus he is able to save. 



INCIDENCE OF TAXES. 465 

Annual taxes, being a portion of the year's production — the 
money proceeds of its crops and earnings — might be supposed to 
be in the first instance a deduction from the returns of the pro- 
ducers, at least until they I'eturn into the channels of production, 
as seed, or cause, in part, of the next year's production. 

As a deduction from production, they must ultimately come out 
of the producers, either of commodities, or of their values. If an 
owner of land pays taxes, he pays them out of that portion of 
the year's annual production which he is able to appropriate. If 
the land enabled him to ai^propriate it, i. e., if he pays the tax 
from an income derived from the rent of the land, then the tax 
is a deduction from the earnings of the industries carried on upon 
that land. If the land lay idle, earning no income, then the tax 
on it must have been earned in some industries carried on upon 
other land. But in each and all these industries one set of men, 
viz., the producers, ordinarily so called, create or bring to 
market the commodity or service, while another, viz., the users, 
employers, or consumers, by their demands give it value. Hence 
the production of commodities, and sei^vices, proceeds from one 
class, and the production of values proceeds from another. The 
commodity may be produced in London, while the value may be 
given to it, in Moscow or Buenos Ayres. The tax may be col- 
lected in London ; its chief effect may be felt in Louisiana. 
, There are those who feel competent to decide, amidst this con- 
geries of mazy influences, radiating outward indefinitely through 
all the transactions of mankind, what the ultimate incidence of a 
tax may be. To me it seems as hopeless as to attempt to set 
bounds to the causative operations of a winter's snOAv or a sum- 
mer's rain. 

To trace the degi-ee of burden, effected by a tax, upon him who 
pays it, involves a difficulty which does not apply, however, to 
ti-acing the benefits of its expenditure among those to whom it is 
paid, or in whose midst it is distributed. The former involves a 
disappearance of values, the latter a re- appearance. In the former 
case the clews disperse as when water sinks into the sand. In 
the latter the visible wealth is reproducing itself before our eyes. 
Hence, those who contrast the beneficial effects of the expendi- 
ture of taxes within a country, with the draining of a country by 
foreign tax-gatherers, are not to be likened to the metaphysical 
philosopliers who are seeking to found an ideal theory of taxation 
on speculations as to its ultimate incidence.* 

* Thus, in the Political Science Quarteiiy for December, ISVr, a report of Colonel Sir 



466 ECONOMIC PHILOSOPHY. 

A part of the incidence of King Grsorge's tax on tea was the 
American Eevolution, and the Constitution of the United States. 
A part of the incidence of Caesar's decree, that all the world 
should be taxed, may have been the birth of Christianity and the 
disintegration of the Roman Empire. As the French Academy 
was compelled to declare that the announcement, on the part of 
any man, that he had solved the problem of the quadrature of 
the circle, should be deemed conclusive evidence of lunacy, so the 
notion on the part of an economist, that he can define tlie ultimate 
incidence of any tax, must consign him to the limbo of vision- 
aries needing, if not the restraint of coercion, at least the tender 
rebuke of pitying regai^d. One or two links in the chain of cau- 
sation set in motion by a tax may be traced. Then the trace is 
lost in the great ocean of aggregate effort and common welfare. 

The taxes collected to promote education are like the one-eighth 
of a farmer's crop, which he I'eserves for seed for the next year. 
It may be said to be a tax on his energies to be compelled to pro- 
duce in any one year a quantity one-eighth greater than he can 
either enjoy or sell, and of which his only use is to throw it back 
into the ground as the condition of reaping the next year's crop. 
Yet the seed-tax imposed by nature is the source of all produc- 
tion. All well-expended taxes are certainly in the same cate- 
gory. This is proved by the fact that, in addition to paying the 
regular state taxes, men freely tax themselves to support chain- 
ties, religions, amusements for others, political parties, or the 

George Wingate makes the following very clear statement of the effects of taxation as 
a mode of wealth distribution. He says: " Taxes spent in the country from which they 
are raised are totally different in their efEect from taxes raised in one country and 
spent in another. In the former case, the taxes collected from the population at 
large are paid away to the portion of the population engaged ia the service of govern- 
ment, through whose expenditure they are again returned to the industrious classes. 
(More accurately, to the general circulation.) They occasion a difEerent distribu- 
tion, but no loss oi* national income (capital). . . . But the case is wholly different 
when the taxes are not spent in the country from which they are raised. In this case 
they constitute no mere transfer of a portion of the national income from one set of 
citizens to another, but an absolute loss and extinction of the whole amount withdrawn 
from the whole taxed country. As regards its effect on national production, the whole 
might as well be thrown into the sea as transferred to another country, for no portion 
of it will return to the taxed country in any shape whatever." 

The economic principle involved here is not altered, when the nation which receives 
the money exported sends goods in exchange instead of rendering services in the shape 
of protection from foreign or domestic violence. The economic effects described are due 
to the depletion of the wealth of the country that parts with its money for any kind of 
services rendered by foreign parties (whether in the nature of protection from violence 
or protection of commodities), instead of having those services rendered by its own 
population.— iV. Y. Pixss. 



DIRECT TAXATION. 467 

exti'a-coustitutional part of state work, and many other social 
benefits. In all tliese cases men count the ijresent tax to be only 
tlie seed sown of ultimate profit. In the degree, therefore, that 
men are far-sighted, sagacious, and enlightened, they are willing 
to sustain momentary taxation to effect ultimate results in which 
they feel that all have a common interest. 

Adam Smitli thought it extremely important that taxes should 
be direct and certain, so that each man should know exactly tlie 
extent of his burden. Cui bono ? The assumption is that the 
man who feels them keenly will resist their unjust imposition. 
But is it a civic virtue so much higher to resist taxation, than to 
pay taxes, that special pains should be taken to make it painful ? 
And are men to be deemed so mean, and void of public spirit, that 
no man will be supposed capable of resisting a tax unless he pays 
it himself ? Of what great value is it, to any man, to have burdens 
made so extremely evident ? Besides, if he on whom the burden 
first falls, after enduring all the pain of paying the tax, really 
passes it over, without knowing it, on some one else, would it not 
have been more painless, and just as true, to have collected the 
same amount of tax, by a mode in which no person whatever 
would have been paine(^ by this unnecessary consciousness of 
being taxed ? If the wisest economist can not define the cases 
in which a tax is transferred, why should the humblfest tax- 
payer be pained with the belief that he is bearing a burden which, 
perhaps, he is only transferring to anotlier ? 

The English ratepayers are taxed for the dwellings they occupy. 
Do they, or do they not, get their rents for a sum made less by the 
amount of the rate, than if they paid no rate ? Economists like 
Mr. Goschen are wholly unable to say. If they do, then the land- 
lord bears the buixlen. But the landlord is so wealthy that pay- 
ing a tax, or accepting a lower rent, is a mere affair of figures to 
his steward. How can a tax be a burden to one who does not 
know of it, and to one who perhaps produces nothing, but osten- 
tation and ennui ? 

The notion, tJiat the incidence of taxes should be made certain, 
is like the kindred notion, that the law should be made simple. It 
demands an impossibility in finance. If the search for the inci- 
dence of taxes has brought to light any one valuable principle in 
taxation, of general application, it is that the taxpayer bears with 
most ease three classes of taxes, viz. : 

1. Those which indirectly promote the energy of national pro- 
duction, in a degree which more than supplies to the taxpayer the 



468 ECONOMIC PHILOSOPHY. 

means of paying the tax, so that where a penny is taken out of 
one pocket in taxes, a shilling is put into the other in the form of 
bettei' wages, more industries, or higher profits. These ai-e the 
protective taxes, educational taxes, and all taxes that perform the 
seed-sowing function. 

2. Those of which the returns come into the treasury of his own 
country, while the taxes are paid by the producers of other coun- 
tries. These, too, are the protective taxes. 

3. Those whose first incidence is a temporary scarcity of some 
product, but whose speedy effect is to greatly cheapen its supply. 

181. The Practice of Modem Govermneiits in Taxa- 
tion — The United States. — Taxation, nearly everywhere, is 
distinguished into general, or national, and local. The latter is 
both raised, and disbursed, within a small fractional district, or sub- 
division of a state, to wit, a county, parish, town, school district, 
or the like, by some form of local board. The local taxation, in 
the city of New York, amounts to upwards of $20, 000, 000 a year, 
which is several times more than that of the State, and in 1860 
equalled the expenses of thirty state governments combined. 
Mere state taxation must not be mistaken for the index to 
the local taxation. Illinois has about 3,500,000 people, and raises 
for sfate purposes about $3,500,000. If this be a fair standard for 
the country at lai^ge, the total state taxation would not exceed 
$60,000,000 a year for all the states and territories. Adding, how- 
ever, the cost of local, city, park, and district expenditures of all 
sorts, probably the aggregate local taxation of the country equals 
the aggregate of national taxation. The latter is shown by the 
following budget for 1883 : 

UNITED STATES BUDGET, YEAR ENDING JUNE 30, 1883. 

[In millions and tenths of millions.] 
Becelpts : 

Customs $214 7 

Internal Revenue 144.7 

Direct tax .1 

Sale of public lands 7.9 

Miscellaneous 30.8 

Net ordinary receipts $398.2 

Expeiiditures : 

War Department $48.9, 

Navy Department • 15.3 

Indians 7.3 

Pensions 66.0 

Miscellaneous 68.7 



Net ordinary expenditures $206.2 

Interest on public debt 59.2 

Total 1265.4 



TAXATION IN THE UNITED STATES. 



4G9 



The accompanying- chart shows the total amount of revenue for 
each year, the general course of expenditure, and the degree in 
which the national i^evenues of the United States have been derived 
from customs duties, from the foundation of the government. 

It is a plausible aphorism of Mr. Mill that customs duties, so 
far as they are protective, can produce no revenue, for they pro- 
tect the domestic j)roduction, only in the degree that they exclude 
the imported article, and they produce revenue only on the quan- 
tity they admit. No instance illustrates more signally the im- 
portance of studying economics in the school of history and ex- 
perience, instead of burrowing under a barren debris of ruinous 
metaphysical assumptions, however acute they may seem to be. 

The above aphorism of Mill is on a par with the ancient demon- 
stration, by the sophists, that motion is impossible, because as to 
any body in space there are only two portions of space in which 
it can move, since all space is comjirised in these two portions, 
viz., the space where it is, and the space where it is not. It can 
not move in the space Avhere it is, because, so long as it continues 
in that space, it moves not. And it can not move in the space 
where it is not, because it can never be in the space where it is not. 
Hence it can not move at all. As specimens of mere chop logic, 
one of these is as good as the other, and both are worthless. 
Bodies do move, and not only do protective duties collect revenues, 
but the entire body of tariff laws which include protective duties, 
always collects more revenue than those which aim not to protect. 
This will appear clearly from the following table of relative pro- 
ductiveness of customs tariffs in the United States during the so- 
called free trade or low revenue periods, compared with the more 
intentionally protective periods : 

TABLE SHOWING AVERAGE IMPORTS AND AVERAGE CUSTOMS, REVENUE 

UNDER "FREE TRADE" ASCENDENCY, AND THE SAME DURING 

PERIODS WHEN PROTECTIONISTS WERE IN POWER. 



Years. 




Amount Imports 
per Year. 


Average Revenue 
from Customs. 


Ratio of Reve- 
nue to Imports. 


1821-3 

Inc. 
1824-33 

Inc. 
1834-41 

Inc. 
1842^6 

Inc. 
1847-61 

Inc. 


3 years 
F. T. 

10 years 
Protect'n. 

8 years 
F. T. 

5 years 
Protect'n. 

15 years 
F. T. 


$ 50,758,073.33 
66,515,935.30 

108,407,276.00 
91,126,945.40 

239,167,587.00 


% 16,557,543.17 
23,066,272.30 
17,183,741.60 
21,331,320.03 
47,605,530.45 


Eev. Im. 

$1 to $3.06 
1 to 2.88 
1 to 7.03 
1 to 4.27 
1 to 5.02 



4V0 HGONOMIO PHILOSOPHY. 

Or, varying the mode of expression, we find tliat, from 1821 to 
1833, a "tariff for revenue" collected only $3.26 of revenue 
on every $10 worth of imports, while in the next ten years, over 
most of which a protective tariff extended, we collected under a 
protective tariff $3.47 of revenue on every $10 worth of goods, in- 
creasing our average importation by $16,600,000 per year, our 
average revenue by $6,500,000 per year, and the ratio of revenue 
to goods imported. From 1834 to 1841, inclusive, eight years of 
free trade, and of disaster caused by excessive importations, our 
average importations nearly doubled, while our tariff for revenue 
fell off nearly $6,000,000 per annum, and we collected only $1.46 
of revenue on $10 of imports. In the five protective years from 
1842 to 1846, inclusive, our importations were less by $16,000,000, 
and the duties collected more by $3,000,000, the ratio of duties 
rising to $2. 34 per $10 of imports. Fi'om 1846-61 the imports were 
made large by our great supply of gold from California, by our 
increased opening up of Western lands through our extending 
railways, by the great demand for our exports occasioned by the 
Irish famine of 1846-9, monetaiy crisis in England in 1847, repeal 
of English duties on bi'ead-stuffs in 1847-9, Crimean war in 
1851-4, French, Hungarian, and German revolutions in 1848, and 
the like. But the revenue on every $10 of imports fell to $1.98, 
thus showing that in no instance have duties "for revenue 
only " been so productive of revenue on a like volume of impor- 
tations nor so productive absolutely as duties levied for both 
revenue, and protection. In the light of these facts, Mr. Mill's 
"obvious tmiism," that " duties which protect can produce no 
revenue and duties which produce revenue can affoi'd no pi'O- 
tectiou,"* becomes a practical falsehood. From 1861 to 1870, 
under protective tariffs the revenue advanced from $39,000,000 
to $180,000,000, each increase of protection being attended by a 
steady rise in the I'atio of the revenue collected to the goods 
imported. In 1861 we collected $1.18 of revenue per $10 of 
imports ; in 1870 it is $5 of revenue per $10 of imports. 

Under the " fi'ee trade " tariff of 1857-60, the government col- 
lected, in the latter year, on an importation of goods to the value of 
$334,350,453 a revenue of only $39,583,125.64, or $1 of revenue to. 
$8.50 worth of goods imported. Under the tariff known as the 
Morrill or war tariff, the rates were increased at nearly every 
session of Congress during the war, especially on iron and steel, 

* Mill's " Political Economy," vol . 2, p. 538 (book v, chap. x. sec. 1). 



THE MORRILL TARIFF. 



471 



cottons and woolens, and we collected in 1869 a customs revenue 
of $177,151,136 on a total importation of $415,560,872, being $1 of 
revenue on every $2.37 of goods imported. Purely in productive- 
ness of revenue the tariff of 1869 was three and a half times 
more effective than the tariff of 18G0. To collect the revenue 

Ratio of Kbvenue to' iMroKT? during 40 Teaks. Scale, §10,000,000 to Section 

Line. 







- 10 Years' 

Pi-o.tective Duties 
Aiv.era'gedi 


8 Years' ^ 
Low Duties 
Averaged. 


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p'rote'ctive 

Duties 
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Duties Averaged. 














































































































































































































































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of 1869, under the tariff of 1860, would have required an importa- 
tion of foreign goods to the value of $1,200,000,000 per anii'am, a 
quantity whose im})ortation was practically a three-fold impossi- 
bility, because (1) Europe could not take so large a quantity of 
our products as would be required to pay for tliem ; (2) we could 
not produce lliem, and (3) the importation of so large a quantity 



472 



EGONOMIG PHILOSOPHY. 



of manufactured goods would have completely destroyed our 
own manufactures. The following table shows the rapid increase 
in the efficiency of the tariff during this period : 



Year. 


Value of 

Merchandise 

Imported. 


Revenue. 


Ratio of 

Revenue to 

Imports. 


1861 

1862 

1863 

1864 

1865 .■ 

1866 

1867 

1868 

1869 


$334,350,453 
205,819,823 
252,187,587 
328,514,659 
234,434,167 
437,638,966 
389,924,977 
357,436,440 
415,569,873 


$39,582,125.64 

49,056,308.00 

69,059.942.00 

102,316,153.00 

85,928,260.00 

160,000,000.00 

176,417,810.88 

164,464,500.00 

177,151,126.00 


$1 to $8. 50 
1 to 4.01 
1 to 3.65 
1 to 3.21 
1 to 2.76 
1 to 2.73 
1 to 2.43 
to 2.11 
1 to 2.34 



The following table presents the contrast between a term of 
years of " free trade," and the like term of protectionist yeai'S : 

COMPARATIVE POWER TO COLLECT TAXES UNDER CONTRASTED 
TARIFF POLICIES. 

Under Free Trade. \] Under Protection. 



Years ended 
June oO. 

1847 . 

1848 . 

1849 . 

1850 . 

1851 . 

1852 . 

1853 . 

1854 . 

1855 . 

1856 . 

1857 . 

1858 . 

1859 . 

1860 . 

1861 . 

Total 



Total Ordinary 

Receipts. 

126,467,403.16 
35,698,699.21 
30,721,077.50 
43,592,888,88 
52,555,039.33 
49,842,815.60 
61,587,031.68 
78,800,341.40 
65,350,574.68 
74,056,699.24 
68,965,812.57 
46,655,365.96 
52,777,107,92 
56,054,599.83 
41,476,299.49 



^79, 605, 256. 45 [I Total 



Years ended 
June 30. 

1867 . 

1868 . 

1869 . 

1870 . 

1871 . 

1872 . 

1873 . 

1874 . 

1875 . 

1876 . 

1877 . 
il878 . 
il879 . 
.1880 , 
,1881 . 



Total Ordinary- 
Receipts. 

$462,846,679.92 
876,434,453.82 
357,188,256.09 
395,959,833.87 
364,431,104.94 
365,394,229.91 
322,177,678.78 
299,941,090.84 
284,020,771.41 
290,066,584.70 
281,000,642.00 
257,446,776.40 
272,822,136.83 
333,526,610.98 
360,782,292.57 

;5, 032,539, 138.06 



Whether this enormous increase of revenue, under protective 
duties, was attended by greater disadvantages or advantages to the 
industry and prosperity of the country, may more properly be 
considei^ed when we come to discuss the merits of protection as an 
economic policy, i.e., as it affects the people. 

No one test of the general prosperity of a country, however, 
is more satisfactory than the rate of immigration into it, aa 



PROTECTION STIMULA TES IMMIQBA TION. 473 

that measui-es its general economic desirableness, relatively, 
to all competing countries. In the period of low duties, many 
extraordinary exterior circumstances concurred to stimulate 
immigration, such as the new gold crop of Califoi-nia, the new 
railroad epoch in the United States, the Irish famine, Crimean 
war, and revolutions in Europe. In the pi'otective period all 
these were wanting, and no prominent cause but the prosperity 
induced by protective policies, and an abundance of paper money, 
existed to invite population. Yet the immigration in the first 
period, viz., 3,817,931, was far exceeded by that in the second, 
5,998,334. In short, in a period of high duties, when the amount 
of revenue collected was 6-i- times greater than under low duties, 
the immigration was still twice as great as under the low duties, 
indicating a condition of labor capable of attracting twice as 
many persons. These facts are shown in the diagram : 

Comparative Power to collect Taxes. 
1847-1861. ■ Free Trade. 

1867—1881. - Protection. 

Comparative Power to attract Immigrants wJdle collecting these Taxes, 
1847—1861. ^= Free Trade. 

1867—1881. ■ Protection. 

As a mere fiscal policy for the promotion of revenue, the 
foregoing figures, embodying much of the experience of the 
United States, show that tariffs designed to protect do, in the 
aggregate, produce most revenue. 

The state and local taxation rests, in most of the States, on land 
and its improvements, and fixed capital generally, aided by 
license taxes on the sale of liquors at x'etail, taxes on personal 
property, and in some States on railways, and on certain occupa- 
tions. It is all, or nearly all, claimed to be direct taxation, as 
that word is used by the economists, i.e., it can not, it is thought, 
be transferred, by the party that pays it, so that its ultimate burden 
shall rest on another. 

Whether, however, taxes on land are paid by the landlord, or by 
the occupier, has of late been much disputed. In England, where 
the occupier pays them, in the first instance, it is often asserted 
that ultimately the burden is shared by the land-proprietor. In 
America, where they are at first paid by the land-owner, it is 
often asserted that he is able to add them to his rents. This can 
not be proven, and is very doubtful. The rates of land rent 
are determined by the competition of tenants to hire, and by 



474 ECONOMIC PHILOSOPHY. 

the average earnings of capital in other occuj)ations. For hind- 
lords are presumed not to seek to extend investments in real estate, 
beyond the point where as large an average return can be got 
from the capital invested, in the pui'chase both of land and im- 
provements, as could be derived from the same capital, invested in 
other forms of property, which would require no more care. 

It is by no means clear that laying the taxes on land either in- 
creases their value to tenants, or increases the returns from the 
general avenues for the investment of capital. 

Eents are very much lower in England, where land is untaxed, 
than on like values of property in France and America, where it 
is taxed. But there are too many factors, more potent than this, 
to justify attributing it to this chiefly. 

Hardly any of the state taxes rest on consumption. Nearly all 
aim to tax capital. This is the outcome of universal suffrage. In 
the rural districts about one-half of the voters are taxpayers, 
under a system which aims to tax capital and land only. In the 
cities, only from one person in five, to one person in twelve, is a 
taxpayer. The effect of having taxes laid by the non-property- 
holders, and paid by the property-holders, is to infuse a commu- 
nistic spirit into all tax voting, the non-taxpaying classes com- 
bining together to have as much money expended as they can, 
since, the more money is expended, the greater their chance of 
getting some of it. 

A school district, in one of the suburbs of New York, had, a few 
years ago, so many wealthy taxpayers, who were too aristocratic 
to send their children to any public school whatever, and so many 
voting parents of poor children, determined to give them all the 
accomplishments of a fashionable education, at the cost of their 
wealthy neighbors, that by introducing instruction in modern 
languages, music, etc., the cost of instruction was brought up for 
a time to $600 per pupil per year, a cost greater than the wealthier 
parents were paying, for the tuition of their own children, at 
Harvard or Yale. 

Thus, the theory of Adam Smith that, where taxes are most 
certain in their incidence, they will be most economically laid and 
expended, undergoes an explosion, due to the fact that Smith . 
made no account of the interest which should govern their laying 
or expenditure. It was because, in this case, the tax was certain 
to fall on the rich, and they were in the minority, and was certain 
to benefit the poor, and they were in the majority, that the tax 
was laid wastefully. 



TAX ON LIQUORS AND TOBACCO. 475 

The chart shows that nearly the whole means of maintaining 
the National Government, from its foundation to the present 
time, have been derived from duties on imports, except that in 
1835 to 1836 nearly half the expenses of government were paid 
by sales of public lands, and since 1862 the revenue from the 
internal or excise taxes was for several years greater, and is still 
nearly as great, as from duties on imports. Both these forms 
of taxation rest on consumption, except as they may in certain 
instances rest on the producer of the taxed product. The degree 
in which they so rest will be discussed in chapter xv. 

Taxes on alcoholic beverages and tobacco are so popular in the 
United States, owing to the hostility to the accustomed use of 
these two articles, on moral and hygienic grounds, that it has 
thus far been dangerous to any politician to advocate their repeal, 
notwithstanding they were imposed only as war taxes, and the 
revenue derived from them is a surplus and a burden which it is 
desirable to get rid of, and which interferes with the most happy 
adaptation of our revenue system to the real wants of the coun- 
try. Whether the taxes on liquor and tobacco do in fact dis- 
courage their use, in any degree, is open to question. The pre- 
vailing modes of partaking of both, by the custom called ' ' treat- 
ing," imply that the person who pays for them usually does so 
from some motive of hospitality or ostentation among his 
friends, or to cultivate the good-will of persons with whom he 
desires to ingratiate himself. All these purposes ai'e more com- 
pletely subserved by the dearness of the article, rather than by its 
cheapness. Perhaps the masses of the buyers of liquors and 
tobacco prefer them to be high-priced rather than low-priced. 
Human nature has never Avholly escaj)ed that infatuation for the 
ostentatiously expensive, which induced the gourmands of Rome 
to melt pearls into their wine, not because they improved its 
flavor, but because they increased that display of cost which was 
a chief purpose in all their entertainment, or to make their soups 
of the livers of singing bii'ds because they were high-priced. 

It is certain that an indirect effect of the high taxes on wines of 
every kind, is to promote lai'gely their adulteration, and to in- 
crease the difficulty of making any use of wine for medical pur- 
poses, which would be an economic consideration, in case it shall be 
finally determined that wine has any medical utility. 

Nor have the Americans ever adopted the practice, which pre- 
vails in England, of destroying the flavor of high wines, or alcohol 
needed for chemical and manufacturing purposes, without destroj^' 



476 ECONOMIC PHILOSOPHY. 

ing its utility, by infusing into it a portion of wood-naphtha. It 
thus becomes methyllated spirits, which in England are free of 
the excise tax. Here, therefore, alcohol used in the mechanic 
and manufacturing arts is unnecessarily and wastefully taxed, 
while many good objects, and no bad purposes, would be served 
by freeing it from tax. 

182. Taxation in Great Britain — Local. — The total 
taxation of the United Kingdom of Great Britain and Ireland 
for the year of 1872-3* was £102,434,866, or £3 3s. 2d. per 
head of the population.! Of this the local burden was £40,991,- 
770, and the national taxes were £79,763,298. Of the local tax- 
ation 33.9 millions were contributed by England and Wales, 2.8 
millions by Scotland, 5.1 millions by Ireland. The following is 
a complete statement of the receipts for local purposes : 

Amount of Direct and Indirect Taxation, and of other Sources of Receipts for thepur- 
poses of Local Expenditure. 

Levied by Rates. England & Wales. Scotland. Ireland. Total. 

Direct £18,619,378 £1,683,008 £2,514,691 £22,017,677 

Indirect, from Dues, Tolls, etc. 3,939,838 455,454 300,234 4,694,916 

Total of Taxes £27,511,993 

Other Sources of Receipts. 

Sales or Eents of Property 923.001 285,060 30,961 1,239,032 

Government Contributions.... 962,895 183,738 1,900,059 2,087.592 

Loans 6,583,812 145,653 169,995 6,899,460 

Various Sources 2,926,984 138,763 187,946 3,253,693 

Local Taxes 22,558,616 2,148,462 2,814,915 

Total £33,955,308 £8,831,676 £5,103,876 £40,991,770 

The rates are taxes paid by the occupier of lands and houses, 
and for the collection of which a warrant issues authorizing only 
a seizure of the occupier's goods and chattels. They are fre- 
quently spoken of, in English economic works, as a tax on lands, 
but differ wholly from an American tax on land, in the fact that 
for delinquency in the payment of the latter, the title to the land 
itself is sold, while, for failure to pay the English rate, only the 
goods of the occupant are distrainable. This distinction probably 
determines the incidence of the tax. The English rate-payers 
will never succeed in putting the burden of their rates in the 
first instance on the land-owner, until they enact that the warrant 
issued to collect the tax shall sell the land itself, and not the goods 
of the occupier. 

The rates levied are liable to be increased in number, by any 
act of parliament which discovers a new local object for which 

* " Condition of Nations," by Kolb, translated by Brewer, p. 61. 
t Each pound sterling equals $4.87. 



ENGLISH TAX RATES. 477 

money needs to be expended, or diminished by any act consolida- 
ting- ox* repealing previous rates. They consist of two classes, viz. : 
rates levied in primary districts, such as a parish, which may be 
likened to what Americans would call township taxes, and rates 
levied in aggregate districts, such as a count3^* There are twelve 
principal kinds of parish rates, viz. : (1) the poor rate, (2) the high- 
way rate, (3) the burial board rate, (4) the lighting and watching 
rate, (5) the general district rate, (6) the sewerage rate, (7) the 
towns improvement rate, (8; the animal contagious diseases rate, 
(9) the chtu'ch rate, (10) the sewers rate, (11) the genei-al sewers 
rate, (12) the drainage, embankment, and enclosure rates. This is 
by no means a complete list, as Mr. Fawcettf mentions also a 
public library and museum rate, parish improvement rate, bor- 
ough lunatic asylum rate, borough library and museum rate, 
borough baths and wash-houses rate, boi'ough improvement rate, 
and borough burial-board rate. Mr. Fawcett regards these rates 
as a feasible mode of carrying out, not only gratuitous instruction, 
and all forms of special education, but state emigration, provision 
for children whose support is found inconvenient to their pai-ents, 
the encouragement of co-operative associations, the purchase of 
land from landlords for the tenants, and advance of capital to 
work the land, and other forms of socialistic relief. This con- 
stantly increasing demand upon the rates, he says, is encouraged 
by the opinion that the wealth of England is so great that thei'e 
is no need for economy. 

Besides the ]3arish' rates, there are the county rates, which are 
expended chiefly for county bridges, gaols, shire halls, county 
kmatic asylums, and county police; the hundred rate for mak- 
ing good the damages occasioned by a riot ; the borough rates 
which ai'e levied in cities for like purposes to those for which 
county rates are levied in the country. 

Mr. Chalmers J says that local government in England may be 
fitly described as consisting of a chaos of authorities, and a chaos 
of rates. With few exceptions, all the various areas intersect, and 
overlap. A very jungle of jurisdictions is brought about by the 
circumstance that all these areas are governed by different au- 
thorities, elected or selected at, different times, by different means 
or bodies. These defects, and difficulties, have resulted from the 

* Report of select committee on local taxation, Goschen, 152. 
t "Manual of Political Economy," p. 607. 

X " Local Government." The " English Citizen Series," by Mr. Chalmers, McMillan 
&Co.. 1883. 



478 ECONOMIC PHILOSOPHY. 

English nabit of legislating by piecemeal, the shortcomings of 
existing mstitutions being remedied, from time to time, by a species 
of patchwork. This system, or want of system, it is not altogether 
easy to replace, numerous vested interests being enlisted in favor 
of its permanency. Under it, offices are unnecessarily multi- 
plied, and, there not being a redundance of talent available for 
the local public service, the latter suffers in an appreciable 
degree. Under the cii^cumstances, it is not singular that confusion 
and extravagance should be the cliaracteristic features of the 
whole system. 

The paupers number 843,000. They multiply in proportion to 
the adequacy of the provision for their support, and the unwil- 
lingness of the government to protect industry, though they sup- 
port the idle. The rule is universal, that if taxpayers convert 
their backs into a comfortable saddle, they will always find persons 
obliging enough to ride, particularly where walking is made pre- 
carious and difficult. The paupers cost a sum equal to nine-tenths 
of the amount required to maintain the navy and fleet* equipped 
with all the appliances of modern warfare, and the number of 
adult able-bodied paupers is about the same as that of the army 
and navy combined, excluding soldiers serving abroad. 

There is no system of town government, and no town budget. 
The areas from which taxes are collected overlap each other 
in endless confusion. No particular local area can accurately 
tell how much it pays, except for some one purpose, for when it 
comes to pay for a diffei'ent purpose it will find itself part of a 
different area, and its rate for that purpose will be levied by a 
dififerent board, or by different officers at a different time, and on 
a different valuation. Very few of the towns are incoi'porated, 
and those that are incorporated are not thereby delivered from 
the jurisdiction of conflicting local boards. Mr. Goschen says : 
"There is no labyrinth so intricate as the chaos of our local 
laws." Mr. Chalmers says : " There is neither co-ordination nor 
subordination among the numerous authorities that regulate our 
local affairs." 

Some attempt has been made to lessen extravagance in the levy- 
ing of local rates by causing the local boards, which levy these 
various rates, to be elected on the plural system, so as to accord to 
taxpayers a voting influence proportionate to their burdens. For 
instance, the board of guardians which disburses the poor rates 

* Cost of Navy for 1878, £10,978,593 (" Condition of Nations," Kolb, p. 56). 
tCosJ. of the Poor, 9,771,000 (Gosclien on " Local Taxation," p, 15), 



THE ENGLtSH B UDGET. 479 

consists of the justices of the peace resident within the union 
(district under one set of officers for poor relief), and of a cer- 
tain number of elected guardians who are voted for by the rate- 
payers, upon a plural scale, under which both owners and occu- 
piers of property renting- for less than £50 have one vote, if 
renting for £50 and less than £100 two votes, if for £100 and less 
than £150 three votes, and an added vote for each £50, up to six 
votes, where the increase of voting power stops. Members of the 
various boards are required to possess cei'tain property qualifica- 
tions, those of a town councillor being the ownership of real or 
personal property of the value of from £500 to £1,000. 

183. General Taxation in Great Britain. — The principles, 
which govern the adjustment of the general tax system of Great 
Britain, are so often travestied in their statement, that a more care- 
ful survey of the facts, than is usually made, should precede 
any discussion of their principles. Each year's budget is nearly 
alike. In 1882 the total revenue, national and local, was £148,371,- 
480, or in dollars $741,857,400, to a total population of 35,262,762. 
The following budget for an earlier year may serve our use : 

GROSS PUBLIC EEVENTJE. 

Year ending 
March 31, 1878. 

Customs £19,969,000 

Excise 27,464,000 

Stamps 10,956,000 

Land Tax and House Duty 2,670,000 

Property and Income Tax.. 5,820,000 

Post OtHce 6,150,000 

Telegraph Service 1,310,000 

Crown Lands 410,000 

Interest on Advances and Miscellaneous 5,014,298 



Total £79,763,298 

GR OSS PUBLIC EXPENDITURE. 

Interest and Management of National Debt £28,412,750 

Civil List and Civil Charges 16,387,139 

Army 14,607,445 

Repayment to Army Funds 500,000 

Army Purchase Commission 504,719 

Navy 10,978.592 

Charge of Collection of Revenue 7,012,850^ 

Total £82,403,495 

Since 1840 the gross revenue collected from duties on imports 
has never been above 25| millions of pounds, nor below 20, until 
1877, when it fell to 19 millions. On the whole, however, the 
average customs revenue has declined, in the forty years, from 
the larger of these figures to the smaller, or about one-fifth, 



480 



EGONOMIG PHILOSOPHY. 



and is still declining. The rate of this decline is shown by the 
following figures : 



In 1858 £23,382,141 

"1860 24,391,084 

" 1862 23,692,955 

"1864 23,234,356 

" 1866 21,302,239 

"1868 22,664,981 



In 1870 £21,499,843 

"1872 20,235,892 

" 1874 20,323,325 

" 1876 20,020,000 

" 1877 19,922,000 

" 1878 19,969,000 



In the year 1861, of the total customs revenue of £23,500,000, 
sugar yielded nearly £6,500,000, tobacco over £5,500,000, spirits 
and wine nearly £4,000,000. In 1870, sugar yielded £5,396,561. 
In 1871 the duty was reduced, and in 1874 it was repealed. 
For fifteen years, from 1863 to 1879, there was an average annual 
increase, in the yield from the same rate of duty on tobacco, of 
£158,140, thus nearly compensating for the repeal of the duty 
on sugar. 

As the post-office represents an expenditure fully equal to its 
earnings, this item of £6,150,000 may be estimated as not forming 
any part of the actual revenue. The government is supported 
therefore by duties on imports, excise (on the domestic manufac- 
ture and sale of liquors and tobacco), by stamp duties and tax 
on incomes. 

Of the duties on imports at present collected, about one-half 
($45,000,000) are collected on tobacco, and about one-half of 
England's importation of tobacco, to wit, 30,000,000 pounds, 
comes from the United States. The duty ranges at from 3s. 6d. 
(87 cents) sterling, to 3s. 9<i. on the leaf, to 5s. ($1.20) on the manu- 
factured plug tobacco, cigars, and snuff. The duty is prevented 
from being protective of the cultivation of the plant by a statute 
of 13th Victoria, prohibiting the cultivation of the plant, ex- 
cept in the drug gardens of three universities, on an area not 
exceeding one pole of land.* 

* Shadwell, an English economist (" Pol. Econ.," p. 610), says concerning this pro- 
vision : " The celebrated order of the Dutch government to destroy the spice trees in 
certain parts of its East Indian possessions has always been cied as an instance of the 
prompting of a narrow commercial selfishness, and Humboldt could give no stronger 
instance of the arbitrary tyranny of the Spanish government than its order to the 
Viceroy of Mexico to destroy the vines and olive trees which had been planted in that 
colony. Yet the first of these was certainly, and the second may possibly have been, 
not a whit more tyrannical than the prohibition which is still enforced by our own 
government against the cultivation of tobacco in the United Kingdom. It is not 
simply the legacy of a distant age, but the experiment of allowing its cultivation 
has been fairly tried and abandoned for fiscal reasons. In England, indeed, it was 
prohibited almost as soon as it bad commenced, but in Scotland it was permitted 
down to the middle of the last century, and was suppressed on account of the difli- 



THE DUTY ON TOBACCO. 481 

The difference of thirty- three cents per pound by which the duty 
on the manufactured article exceeds the duty on the leaf is prohibi- 
tory of the importation.* Nor is tliere any excise (internal reve- 
nue) duty on British manufactured tobacco to countervail the 
protective effect to the British manufacturer, of thisdiffei'enceof 
duty.f 

While British writers iisually speak of the specific duty on the 
leaf, as equivalent to an ad valorem duty of 500 per cent., i. e., 
that the duty is five times as great as the ordinary foreign price 
of the product, this assumes that the foreign price of the pro- 
duct is Sd. sterling, or 16 cents per pound. The price at which 
the tobacco shipped from the United States is invoiced is, how- 
ever, only 6f cents jier pound, and on this invoice price the 
English duty instead of being 500 per cent, would be 1,250 per 
cent., while the duty on cigars and the higher forms of the 
manufacture would be about 2,000 per cent., of which 400 per 
cent, would be protective to the British tobacco manufacturer. 

While the law governing the tobacco duty suppresses the domes- 
tic production of the leaf, in order to avoid protecting the Irish 
farmer, it still maintains in behalf of the British manufacturer 
a strictly protective duty, four times higher in its protective 

culty of enforcing the payment of the excise duty upon home-grown tobacco. Ire- 
land still remained free in this respect ; but here again, as in the case of Scotland, 
as soon as the cultivation of tobacco assumed any large proportions it was prohibited 
by the government. It was finally suppressed by the Act 3, William IV., cap. 20, 
"the vigorous enforcement of which," says Mr. McCuUoch, "notwithstanding the 
clamors it occasioced, was highly creditable to the government (p , 238)." This pro- 
hibition is still made a matter of complaint by Irish politicians ; and as some parts 
of Ireland are well qualified for tobacco culture, it is much to be regretted that so 
poor a country should have been deprived of one chance of retrieving its fortunes. 
It does not appear why English oflicials should find it more difiicult to levy an ex- 
cise duty on tobacco than their brethren in France, where the culture of tobacco is 
permitted. Perhaps the real secret of the difiiculty is the exorbitant height of the 
duty, which, as it amounts in some cases to 500 per cent., holds out a great tempta- 
tion to smuggling, and as long as this temptation remains the revenue will always be 
defrauded, whether it is collected by custom house or by excise officers. 

* On this point Chambers' Encyclopedia, Art." Tobacco," says: " Tobacco, owing to 
the high rate of duty when in any manufactured form, is mostly imported in the leaf; 
but small quantities are brougliD in chiefly for re-export, in various states of manufac- 
ture." Our customs returns for 1883 show an export from the United States to Eng. 
land of 299,000 cigars, worth $10,151, no snufE, and all other manufactures of tobacco 
only $604,141. 

t On this point Chambers' Encyclopedia, Art." Excise," says : " The only articles on 
which excise duties are now charged are spirits, malt, sugar, chicory, rice, horses, and 
the passenger receipts of railway companies." Those who aflirm, therefore, that the 
heavy import duties, provided by the British tariff on a few articles, are prevented from 
being protective by countervailing excise duties, are in error as to the first and lead- 
ing item. 



4S2 SIOOMOMIC PHILOSOPHY. 

quality than any protective duty in the American tariff, and taxes 
a raw material of manufacture, by a duty from twelve to fifteen 
times higher than any American duty. 

Nor is either the protective or the obstructive jirinciple absent 
in other features of the British tariff and excise. The duty on 
rum yields $11,150,000, while the molasses, and other materials 
from which rum is distilled, come in free. There is a difference 
between the excise duty on home-made spirits, and the import 
duty on those imported from abroad, which acts as a protective 
duty in favor of English distilleries.* Brandy pays duties 
amounting to $7,935,000 and wine $7,000,000. While British 
grapes are not a marked success, their customs laws seem to aid 
materially to strengthen the manufacture and sustain the high 
reputation of British brandy. From ninety to one hundred fluid 
articles, chiefly patent medicines, from America, pay a duty of 
$3.36 per gallon. 

In proportion to population. Great Britain collects $3 per capita 
of revenue from customs duties, as against the same sum collected 
by the United States. None of its duties rest on food or manu- 
factured articles of wood, wool, silk, cotton, linen, or the metals. 
To collect her revenues. Great Britain is divided into 133 cus- 
toms districts, each with a collector and subordinates, against 
about 128 districts for the vast area of the United States. In 
London alone there are about 1,550 customs officials and in Liv- 
erpool about 850. The American system employs 4,137 men 
in all, and involves a total cost for collection in 1880 of 
$5,995,878.06. It is not believed that thefoixe employed or the 
total cost varies materially under the British and American sys- 
tems, in proportion to the sum collected. Summing up the three 
classes of duties on which we have made no comment, a well-in- 
formed writer says, ' ' From the stamp duties, land and house tax, 
and income tax, not charged in the United States, Great Britain 
collects $116,000,000 annually. Every bill of exchange or re- 

* Shadvvell, "Pol. Econ." p. 601, says: "The higher rate of duty on spirits is adopted 
as a compensation for the restrictions upon native distilleries, which, according to them, 
placed them at a disadvantage in competing with foreign rivals. But H. Fancher dis- 
putes the validity of the excuse. One of the excise regulations which is compensated 
in this way is the prohibition against brewing and distilling at the same time, but he 
denies that there are any manufactures on the continent who, by being allowed to 
brew and distill at the same time, gain any advantage over their English rivals. If this 
is so it is obvious that the difference between the customs and excise duty on spirits acta 
as a check on importation, and must, to some extent, relieve the native manufacturers 
from the wholesome influence of competition and subject the consumers ton corre- 
sponding loss." 



PROFITS OF TRADE. 483 

ceipt, all professions, trades, and incomes, exery deed, probate, 
legacy, house, carriage, servant, gun, or dog must pay." A 
laundry woman, who sent her washing home by her infant son, 
was made to pay a i^orter's license on the boy. But the noble- 
man who can ride 125 miles in a right line, without once getting 
off his own land, may congratulate himself on the fact that men 
of his class have had such an influence in shaping the system of 
taxation, that no wari'ant for the collection of taxes, and no execu- 
tion for debt, can sell a foot of this land from its proprietor. 

184:. India— Taxation by Profits of Enforced Foreign 
Trade. — New devices, in government and society, often exist for 
long periods, before they come to be recognized by their right 
names. To sustain a vast empire, highly free and liberal as to its 
conquering elements, but equally despotic and cruel toward its 
conquered, without any other taxation on the subject peoples 
than that derived from the profits on their trade, is a compara- 
tively new device in government, and it is not wonderful that it 
should not be fully understood. 

Many are reluctant to admit that the profits of trade can be a 
mode of taxation. In a small way, laws have here and there 
been passed, in America and England, which assume that when a 
merchant obtains a certain degree of power over his customers, 
sufficient to compel them to trade only with him, the profits of 
voluntary trade may often become a severe form of despotic 
swindling. Legislators perceiving this, have forbidden the system, 
on the part of manufacturers, of paying men in store orders, for 
goods to be purchased at the employer's store, and at his prices, 
since the buyer, or workman, is thus deprived in the purchase of 
his goods of all the healthy effects of competition. 

Tlie British system of taxing its outlying empire, and especially 
the Mohammedan, heathen and barbarian portions of it, by sim- 
ply collecting from them the profits of a species of trade more 
or less enforced by her military arm, is a device of this kind. 
No sketch of British taxation would be faithful to the svibject, 
which omitted to trace her system of sustaining military and 
financial governments, in a more or less acute form of armed coer- 
cion, or cut-throat loans over Ireland, Turkey, Egypt, India, 
China, Japan, South Africa, the islands of the Indian Archi- 
pelago, Australia, New Zealand, Tasmania, Cyprus, Malta, and 
even Bi'azil, and Mexico, for the sake of the profits that can be 
reaped from their trade. Great Britain has now 260,000,000 of 
people under her sway, of whom 220,000,000 are heathens who do 



484 ECONOMIC PHILOSOPHY. 

not desire hei' kindly and officious interposition in their behalf. 
Yet from all those people she gathers no taxes by that name, for the 
support of her imperial government. Since about 1846; the well- 
understood policy of Great Britain has been to require each of 
her provinces, Canada, Australia, India, the Cape Colony, etc., 
to raise within itself the revenue required for its own government 
expenditures and national defense, without contributing any 
thing toward defraying the cost of her own supervision of their 
affairs, though much of the attention of the imperial government 
is given to guarding its ascendency over them. Its own compen- 
sation for the enormous cost at which it stands ready at all times 
to preserve its dominion over them, with the last drop, if need be, 
of British blood, is found in the two privileges of "furnishing 
Englishmen with a career,"* in governing these outlying peo- 
ples, and in furnishing English manufacturers with a market for 
their goods. 

Tlie British Empire is, therefore, maintained by military force, 
for the sake of the profits involved in the system of trading that 
arises between a conquering race of shop-keepers, bankers, and 
artisans, and the world's conquerable races of borrowing farmers, 
peasants, and laboring barbarians. As government may, in 
military periods, accept as a tax the military services of its sub- 
jects, or the rents of their land, or their gifts, as of Peter's Pence 
to the Pope, and so the real taxation is concealed under another 
name, so England's taxation by an empire of shop-keepers, 
existing only for purposes of trade, appropriately takes the 
form of profits of trade. 

"One-seventh of India," says J. Seymour Keay,t "was con- 
quered by the English by force ; six-sevenths were obtained by 
breach of trust." Native princes were told that they needed and 
must have the protection of British troops, and immediately upon 
accepting the protection, they became prisoners in their own pal- 
aces. Native merchants were supplied with every thing they de- 
sired to sell, so cheaply by British manufacturers, that they ceased 
to be customers of the Hindoo manufacturers and artisans, though 
tlie latter had invented the loom and the cotton thread, and the 
former had only substituted coal and steam, as workers, for human 
muscle. 

Anterior to the rule of the British in India, that country in- 
cluded, in its population, all ranks and grades of wealth, except 

* The language of Wm. E. Gladstone, in defending the British occupation of Egypt, 
t " Spoliation of India." See Nineteenth Century for July, 1883. 



SPOLIATION OF INDIA. 485 

the famine-stricken and the sufPering. Its industry had, for genera- 
tions, been a success, in a material point of view. It had capital- 
ists, as well as ryots (peasant farmers), manufacturers of looms 
and fabrics as well as cultivators of rice, merchants, traffickers, 
great landlords, nobles, rich priesthoods, scholars, philosophex'S, 
palaces, temples, bankers, money-lenders, and all the appliances 
of a vast and active interior commerce, engaging the activities and 
satisfying all the wants of a population larger than that of all Eu- 
rope. To-day, after a career of robberies of capitalists under pre- 
tense of extorting tributes, indemnities, confiscations, and fines — 
after the people have been mown down like grass by decimating 
famines that recur every few years, the country contains virtually 
a population of 200,000,000 paupers, "with hardly a native employ- 
ing capitalist, or landholder, where formerly there were hundreds, 
— to advance the food required for the employment of any large 
force, to till the soil, or undertake any other enterprise. In a single 
famine, and in a single province (Mysore), in 1877, out of a pop- 
ulation of 5,000,000 fully 1,500,000 died of famine. The total num- 
ber of persons who perished in the various famines, induced by 
the dislocation of native commerce among the people themselves 
in the interests of a foreign trade, probably exceeds the entire 
present poptilation of England.* 

The Indian peoijle pay a revenue of $350,000,000 annually, for a 
government wholly alien in its S]3irit and aims. Of this $150,000,- 
000 is paid in salaries to Englishmen, civil and military. In the 
civil service the average salary of a native officer is $100 a year ; 

* Mr. Martin Wood pays : " In the fifty-two years ending 1854 there was a record of 
thirteen or fourteen famines, with a probable loss of life of 5,000,000. But in the period 
of only eighteen years from. 18G0 to 1878 there were sixteen famines, with a loss of life 
of nearly 12,000,000. Mr. Wm. Digby gives famines of 1861 to 1870, six in number, 
deaths, 4,585,000 ; and from 1871 to 1880, sis in number, deaths, 6,736,420." 

In Journaloftlie Society of Arts, "PQ\>v\\SiXj2Q,K8^,i& an essay on "Historical and 
Recent Famines in India," by F. C. Downs, containing a catalogue of all known Indian 
famines. The Famine Commission estimate that for the two years 1876-8, in a popula- 
tion of 190,000,000, there were 5,250,000 deaths in excess of what would have occurred 
if the seasons (supplies) had been ordinarily healthy (abundant). 

General Prendruf t estimated the government had expended £24,500,000 in works of 
irrigation, all of which had paid good dividends, and had sunk £33,500,000 in hopelessly 
trying to mitigate famines in which at least 10,000,000 lives had been lost during the 
century. 

In some of these famines the number of bodies exposed on the highway was so great 
and their appearance so hideous that even the horses of the British officers would not 
ride by them. The stench was so pervad ing that sappers and miners were sent ahead to 
bury the bodies before the governor-general could pass through. In the corruption of 
these exposed bodies the Asiatic cholera, called by the Hindoos '■ The British Cholera," 
•riginated. 



486 ECONOMIC PHILOSOPHY. 

the average salary of an English officer is $6,000 a year. Out of 
a total white population of 68,000 persons, exclusive of the army, 
25,402 are governing officers, and their salaries amount to $63,- 
882,865, while 11,231 native officers draw in all less than 
$11,000,000. 

A native army of 125,000 men is officered by 2,800 British offi- 
cers, while an English army of 64,000 troops, with 3,200 British 
officers, is required to hold the native army to its work. The mer- 
cantile profits of English traders in India are upwards of $70, 000,- 
000. A heavy burden of railway loans, and private loans, renders 
all parts of the population tributary to London. The money that 
is loaned to them is but a small portion of the profits that have 
been made out of them. Whole cities in England have been 
built up on the profits of conducting, 17,000 miles away, the ex- 
changes of food for cloth and iron which the people of India could, 
far more economically and securely, have conducted with each 
other. India cotton was shipped from the city of Calicut, where 
the manufacture of calicoes began, to Manchester, to be there spun 
and woven after designs borrowed from India, and thence shipped 
back, 34,000 miles in all, one-seventh of the distance to the moon, 
to be sold to the very ryots who were deprived of bread by the 
substitution of these foreign wares for their own. 

Justice is administered in the courts, chiefly as a means of pro- 
moting the collection of revenue, by the sale of stamps. The aver- 
age annual income of the majority of the people is $10, out of 
which they pay in taxes $1.50. The cultivation of 120,000,000 
acres of land is taxed directly $105,000,000, though the value of 
the crops derived from the land is only $7 per acre. All the land 
of India is nationalized, and is taxed to nearly the value of the 
ground rent. At all times a large proportion of the population is 
on the verge of starvation. More frequently than in any other 
part of the world, great famines set in, and the people perish by 
millions. Meal boiled in water, or boiled rice, is all the food the 
agricultural classes desire. The government collects on salt a 
direct tax of 2s. 6c?. on every pennyworth, or 3,000 per cent. — a 
sum which represents the value of a laborer's services for a month. 
It is collected from the poorest classes as, a poll tax, without regard 
to whether they have made any salt or not. The horrors of the 
salt tax are inci'edible. Instances have occui'red in which the 
laborer, wlio, in digging a foundation for his hut, found grains of 
saline earth, and laid them in the sun to dry, was lashed for eat- 
ing the dried earth without paying the salt tax, Tlie ryot who 



SPOLIATION OF INDIA. 487 

scooped out a channel for the sea-water with his hands, and 
sucked up the salt crystals from the sand, has been pursued bj^ the 
revenue officer, and lashed for the back tax.* 

An important difference between the English spoliators of India 
and all previous conquerors, whether Parsee or Mohammedan, 
was that the earlier conquerors became part of the country, and 
tlieir spoils of conquests, fines, and rents of land, remained and 
were expended iii the country. The English sj)oliators stayed 
only long enough to grasp their plunder, and then return to Eng- 
land. Since the Suez Canal has shortened the route to India the 
average stay of Englishmen in India has been still more tran- 
sient. Especially is it far more destructive of the industi'ies of the 
country, to pay a land rent of one-half or more of the raw product 
of the soil, to foreign, than to domestic landlords. 

In 1831, the native manufactui'ers and dealers in cotton and silk 
piece goods, the fabrics of Bengal, petitioned the British govern- 
ment, showing that of late years they had found their business 
nearly superseded by the introduction of British fabrics, to the 
suppression of the native manufacture. They said the fabrics of 
Great Britain came into Bengal free of duty, while the manufac- 
tured cottons of Bengal paid 10 per cent., and the manufactured 
silks 24 per cent., to get into Great Britain. They very rashly, 
but politely, asserted their confidence that ' 'no disposition existed 

* Mr. Keay, in " Spoliation of India," iViwefefw^/i Century for July, 1883, says: "I 
despair of giving any adequate idea of the miseries inflicted on a helplees people, too 
poor to consume aught save the bare necessaries of life, by this method of compelling 
them, on pain, as it were, of death itself, to contribute to the support of our expensive 
government. Even to wash a little salt out of the earth is held to be a heinous crime. 
Here is a story vouched for by a member of the Madras Civil Service, and quoted in a 
recent publication : 

" ' A laborer in Madras, having shifted his place of residence, made himself a new 
mnd hut. When he came to occupy the hut, he found the earth floor strongly impreg- 
nated with saline particles . He scraped up some of the dirt, separated the parts as well 
as he could, and put the salt he had collected outside to dry. This was observed by a 
revenue collector, and the man was proceeded against. He was imprisoned, and was 
condemned to receive some lashes.' 

" The mass of the poverty-stricken classes in India dare not risk euch punishments as 
these. For bare life, however, salt must be had. It is a crime to separate the precious 
saline particles from the earth, but it is not a s:atutable offense to swallow the salt 
along with the earth itself. Nothing remains, therefore, for many poor people, but to 
consume the revolting compound. Darwin has familiarized us with the fact that there 
is a class of worms which gain nutriment by passing the soil through their tube-like 
bodies. It has remained for our British Government of India, to reduce large numbers 
of human beings to ihe same expedient. In the state of Hyderabad, where I have lived 
for the last twenty years, the people are entirely dependent on British salt, and great 
moitality is caused among the poor by their eating earth for the sake of its saline 
flavor. The practice is common throughout India." 



488 ECONOMIC PHILOSOPHY. 

in England to shut the door against the industry of any part of 
the inhabitants of this great empire." They asked either that 
Bengal fabrics might come into England free, or that English 
fabrics might pay the same duty on entering India as Indian 
fabrics paid to enter England. 

The government denied the request. So completely were the 
cotton manufacturers of India crushed, that certain cultivators, 
who had paid 78 per cent, of their product to the government as a 
ground-rent, made manure of the remainder for want of a market. 
Though the population of India is more than three times greater 
than that of the United States, Dr. Carey estimated twenty-five 
years ago that all its proprietary rights of every kind in the land 
of India would sell for hardly more than those of the State of 
New Jersey.* 

185. Taxation by Profits of Enforced Trade — Turkey. 
— The motto of England might well be, ' ' Let me make the tariffs 
of a country, and I care not who wears its crown." A country 
can be subjugated by treaty, more cheaply than by armies, if it 
will only make a satisfactory treaty. In 1675 Turkey bound her- 
self to G-reat Britain, to charge only 3 per cent, duties on imports, 
16 cents per ship anchorage, and no internal tax whatever to any 
resident alien. The Turks are said to have been seduced into this 
treaty by the notion that, their government being established to 
convert the world to Moslemism, it was an impiety to permit 
Christians to contribute to its revenues. Certainly, the Chris- 
tians were very willing to profit by this kind of scorn. No duty 
paid by foreigners, therefore, has ever exceeded 7.6 per cent, in 
all the Ottoman Empire. The native farmers and grazers pay as 
high as 62 per cent, of their profits, a special tax on sheep, olive- 
trees, fig-trees, tithes of all other products, and finally a tax on 
exports. But even foreigners residing in the country, are not 
permitted to pay a tax, even for paving or lighting their own 

* Dr. Carey says (" Social Science," by McKean) : " The gross land revenue obtained 
from a country tliat is, naturally, one of the richest of the world, and with an area of 
300,000,000 acres, is $73,000,000. In no case docs the land subject to taxation seem to 
be worth more than four years' purchase ; while over a large portion of the country 
it appears to be wholly destitute of exchangeable value. There being, however, some 
lands tax free, it is possible that the whole may be worth, on an average, four years' 
purchase, giving $288,000,000 as the money value of all the rights in land acquired by 
the people of India in the thousands of years it has been under cultivation. The few 
people of the little and sandy State of New Jersey, with its area of 6,900 square miles, 
have acquired rights in the land valued at $150,000,000 ; while the little island on 
which stands the city of New York, would sell for almost twice as much as all the 
proprietary rights to land in India, with its hundreds of millions of acres, and its 150,- 
000,000 of inhabitants ! 



TURKEY PL TICKED. 489 

streets.* Prior to the treaty of 1675, Turkey represented, without 
decline or decay, the skilled industries and numerous populations, 
inherited through generations, from the Byzantine and Eastern 
Roman Empires, invigorated rather than enervated by the new 
blood of the barbarian Turks. "Her soldiers," says Freeman, 
"excelled those of any Euro]3ean nation." The names which still 
cling to many fine products of art, such as Ottomans, Damasks, f 
' ' Turkish " velvets and carpets, rugs, robes, and chairs, Morocco 
(then tributary to Turkey), Turkey leather, Damascus steel, Tur- 
key red, Afghans, Cashmeres, Astrakhan, Snayrna goods of 
various kinds, Tyi'ian dyes, attar of roses, Arabian horses, all in- 
dicate the high superiority which Turkish industry then main- 
tained in the useful arts. England, with her paltry 2,000,000 of 
people, was hardly more feared, as a rival to Turkey, than Uruguay 
would now be feared by England. The proud Sultan of the 
Ottomans deemed it scarcely worthy of his notice, that the 
obscure island of the north was charging Turkish iron and steel 
with duties of from $25 to $150 per ton, in the hope of one day 
developing its own manufactures. After 1700 it prohibited the 
importation from Turkey or elsewhere of calicoes, chintzes, and 
muslins. Until 1842 it prohibited the exportation to Turkey, or 
elsewhere, of machinery for working flax. In 1720, to compel its 
people to patronize the dear woolens and linens of England, in- 
stead of the cheap calicoes of Turkey and India, England fined 
every person found wearing a printed calico five pounds, and the 
seller twenty pounds. 

While this uni'eciprocal condition of the duties did not mate- 
rially affect Turkey, so long as Turkey and England continued to 
use like processes and machinery, it innnediately exerted an 
effect upon Turkey, more disastrous than war could have done, 
when England (from 1767 to 1846) strode upward on her career of 

* " Modern Turkey," 1872, by Farley, says : " In no other country in the world, having 
equal rank as a slate, .... do foreigners hold such a privileged position as in Turkey. 
For example, they are exempt from all imposts wnatsoever, either state or municipal, 
customs dues alone excepted ; they may lead a life of pleasure or of business ; may 
settle and amass wealth ; or may travel and spend it ; and at all times may claim the 
fullest protection which the laws of the empire are capable of affording, without con- 
tributing one piastre to the expenses of the state, and without being amenable in the 
smallest degree to Ottoman jurisdiction. If the Porte construct a road, light a town 
with gas, or pave or cleanse the streets, it can not compel the foreign residents to con- 
tribute a para towards the cost, while the whole system of taxation is rendered irregu- 
lar and difficult in consequence of the mischievous obstructions offered by these char- 
acters iu nearly every relation between the foreign population and the government." 

t From the place of manufacture, Damascus. 



490 ECONOMIC PHILOSOPHY. 

invention, substituting coal and steam for human muscle, while 
forbidding the export of either her machinery or artisans to Tur- 
key. Immediately Turkey became "the sick man of Europe," 
because the only power, in Europe, that ever admitted all foreign 
goods free. 

The Oriental and Levant Trading Company rivalled the East 
India Company in the magnificence of its j)rofits, and the exhaust- 
ing suction it was able to practice upon a country still nominally 
under its own flag. The ruin of Turkey by foreign trade tvas 
more complete, as respects its commerce and industries, than the 
ruin of Poland by partition, or than the prostration of Rome by 
barbarian subjugation. Liverpool, London, and Birmingham 
grew by the fabrication of wares, not merely of a kind which had 
previously been made for other markets in Turkey, but at prices 
which excluded Turkish products from their own home markets.* 

From the commercial creditor, England has gradually become 
the mortgagee of Turkish revenues and provinces. Egypt is in 
pawn. The Suez is an English highway. The Eastern question 

* In London Academy of Nov. 25, 1876, an English writer says : " Tliroughout beauti- 
ful lauds, once the garden of the world, the human species is becoming extinct. Works 
of irrigation, the masterpieces of by-gone dynasties, are indistinguishable ruins. The 
Great Desert of Arabia, encroaching on the once fertile Syrian champaign, has crept 
onwards year by year, overlapping and overlapping, till the sandy ocean has joined 
hands with the Mediterranean. Around Aleppo alone, in the space of twenty years, a 
hundred villages have disappeared. From Smyrna to Ephesus the traveler may ride 
through fifty miles of the most fertile soil, blessed by the finest climate under the sun, 
without seeing an inhabitant or a cultivated field. Vast and fruitful tracts of country 
in Turkish Armenia, the Troad — nay, the very environs of the Bosphorus — tilled only 
twenty or thirty years ago with all the care of garden husbandry, are to-day a howling 
wilderness, scattered here and there with graves and ruins. On the borders of Armenia 
rises still, with lofty walls and large storehouses, a city, peopled, it is said, within the 
memory of man, with 60,000 souls ; but it is a city of the dead. ' The finest country in 
the world,' says Sir George Bowen, ' has been more wasted by peace than other lauds 
have been wasted by war.' " 

Farley in "Modern Turkey," p. 194 (1872), says : "The manufactures in steel, for 
which Damascus was so famous, no longer exist ; the muslin-looms of Scutari and Tir- 
nova, which in 1812 numbered 2,000, are now reduced to less than 200 ; the silk looms 
of Salonica, numbering from 25 to 28 in 1847, have now fallen to 18 ; while Broussaand 
Diarbekhr, which were so renowned for their velvets, satins, and silk stuffs, do not 
produce a tenth part of what they yielded thirty years ago. Bagdad was once the 
center of flourishing trades, especially of calico-printing, tanning, and preparing 
leather, pottery, jewelry, etc. Aleppo was still more famous, for its manufactures of 
gold thread, of cotton tissues, cotton and silk, silk and gold, and pure cotton called' 
nankeens, gave occupation to more than forty thousand looms, of which at present 
there remain only about five thousand. Various causes have contributed to this de- 
crease of manufacturing industry ; and now Sheffield steel supplies the place of that 
of Damascus ; cloths and every variety of cottons have supplanted silk ; English mus- 
lins are preferred even to those of India, and the shawls of Persia and Cashmere have 
given way to those of Glasgovy and Manchester." 



MISGOVERNMENT OF IRELAND. 491 

is fast becoming one, of the degree of seciu^ity obtainable by Eng- 
land for the Indian Empire, in consideration of permitting Con- 
stantinople to become a Russian capital. 

186. Taxation by Profits of Enforced Trade— Ireland. 

— From 1698 to this day. Great Britain has been one nation and 
Ireland another, as respects taxation. Never in a single instance 
has a British Parliament, or influence of any kind, aimed to 
legislate or administer in a manner to foster Irish interests, or to 
l^lace them on an equality with English. Every act of British 
taxation has treated Ireland as an alien country, whose interests 
were to be subordinated to Englishmen's profits, so far as English- 
men themselves could see clearly where their own profits lay. 
This summing up of three centuries of history is the cause, both 
of the chronic disloyalty of Ireland, and the conviction, so gen- 
erally felt by intelligent men of other nations, that England, not 
having the moral sagacity to rule Ireland fairly, lacks the moral 
right to rule Ireland at all. Englishmen usually charge the ex- 
pression of this conviction, by native Americans, to the desire to 
"cater to the Irish vote." In this way only can Englishmen hear 
Great Britain's ixioral vaci;ity, in governing Ireland, suitably de- 
nounced, without blushing. This charge, however, is as morally 
wide of the truth as England's misgovernment in Ireland has been 
wide of ethical decency. Americans, by their Federal Union, be- 
come instinctively educated to the principle of equity among 
states, and fairness on the part of large states toward small, as 
distinguished from the English notion of absorbing and sacrificing 
inferior states to the one dominant state. An American, there- 
fore, no sooner learns the facts which show that Irish interests 
have invariably been sacrificed to English, than he feels their in- 
justice, with all the force of an ethical training in equal politics, 
w^hich Englishmen do not possess, and can not borrow . 

In 1698, William III., Prince of Orange, on hearing a deputa- 
tion of woolen manufacturers of England complain of the increase 
of woolen manufacturing in Ireland, as something prejudicial to 
the interests of English manufacturers, had he possessed the 
modern American sense of right and equity among states, would 
have answered, "Sirs, it is no part of my business to prevent 
Irish manufacturers from outstripping English. You are both 
subjects of a common realm and entitled equally to the care of 
government." Instead he promised to "do all that in him lay to 
discourage the woolen trade of Ireland." 

In 1698, a majority xu the Ii'isb Parliament, which Mr. Gardner, 



492 ECONOMIC PHILOSOPHY. 

chairman of the Ways and Means Committee of the same body 
in 1782-3, denounced as ' ' corrupt, " was induced to lay an export 
duty on cloths sent to England, instead of an import duty on 
cloths brought from England, the effect of which was to deprive 
Irish manufacturers of the English market. At this time the 
French, by raising their protective duties against England, were 
getting that foothold which soon enabled them to undersell En- 
gland in woolen cloths in all the markets of Europe. 

On measures introduced in 1783 by Mr. Gardner, the Irish Par- 
liament adopted a definitely pi'otective policy, which England 
suffered her to do without open resistance, owing to her own 
humiliation in the loss of America. So prosperous was Ireland 
for a brief period that her Parliament appropriated £50,000 to 
assist Swiss immigrants, principally artisans, in locating in Water- 
ford. Her population increased by 3,000,000 in twenty years.* 
In 1799, when the act of union with England was first proposed 
in the Irish Parliament and defeated, the House of Commons, in 
its address to the King, stated soundly and cogently the reasons 
for defeating it.f 

The late premier has recently given the seal of his emphatic 
approval to the statement that the means by which England 
cozened and bought the passage of the Act of Union thr-ough 
the Irish Parliament were intensely corrupt. Gladstone thus 
gives his sanction to the specifications of corruption embod- 
ied in Plowden's and other narratives of this transaction. Un- 

* Lord Clare, speaking about the condition of Ireland at this period, says : " There is 
not a civilized nation on tlie face of the habitable globe which had advanced in culti- 
vation, in agriculture, in manufacture, with the same rapidity iu the same period as 
Ireland." 

Lord Plunkett, deecribing Ireland at the same time, says : " Laws well arranged and 
administered, a constitution fully recognized and established, her revenues, her trade, 
her manufactures, thriving beyond the hope or example of any other country of her 
extent." 

t The address said : " Giving the name of Union to the measure is a delusion. . . , 
In manufactures any attempt it makes to offer any benefit which we do not now enjoy 
is vain and delusive, and wherever it is to have effect, that effect will be our injury. 
Most of the duties on imports which operate as protection to our manufactures, are 
under its provisions to be either removed or reduced immediately, and those which will 
be reduced are to cease entirely at a limited time, though many of our manufactures 
owe their existence to the protection of these duties, and though it is not in the power 
of human wisdom to foresee any precise time when they may be able to thrive without 
them. Yoiir Majesty's faithful commons feel more than ordinary interest in laying 
this fact before you, because they have under your approbation raised up and nursed 
many of these manufactures, and by so doing have encouraged much capital to be in- 
vested in them, the proprietors of which are now to be left unprotected, and to he 
deprived of the Parliament, on whose faith they embarked themselves, their families 
and properties, in the undertaking." Plowden's 7?eyi«2(;, vol. v. Appendix, page 34. 



THE ACT OF UNION. 



493 



questionably, Gladstone would not have sanctioned the charge 
without knowing, not only that it was true, but that it would not 
be in the power of any Englishman to deny it. Moreover, no 
Englishman of note has denied it, and it therefore stands virtu- 
ally admitted by the whole English nation.* 

The Act of Union was designed to promote Englishmen's profits 
by transferring numerous branches of industry from Ireland to 
England. This was effected by removing all duties, or nearly 
all, from English goods shipped into Ireland, while leaving con- 
siderable duties on those shipped from Ireland into England. 
The doctrine that the "consumer always pays the duty," and 
hence that Englishmen would only be taxing, instead of benefiting, 
themselves, was forgotten. The practice of English legislators, in 
passing the Act of Union, contradicts the English economists, 
almost without exception. The following schedule of rates of 
duties, from Plowden's Revieiv, shows how England kindly gave 
free goods to Ireland and labored on under the burden of tariff 
taxes on all goods purchased by her own people from Ireland : 



Irish Goods shipped into England. 

£ s d 

Beer 8 

Bricks, tiles, etc 5 12 10 

Candles lb 8 1 

Cordage ton 4 10 3 

Cider hhd 19 2 

Glass sq. foot 2 2^ 

" flint or enameled, .per cwt 2 3 6 

Leather lb l^d to 4s 

Paper, glazed per cwt 6 

Silkribbon per lb 5 

Gold mixed ribbon "068 

Silk stockings, gloves, etc " 8 
Miscellaneous silk, silk ware, 

per lb 4 

Soap " 2^< 

Spirits per gal 5 IJ^ 

Starcli per lb 5% 

Confectionery "220 

Tobacco "017 

Snuff " 110J4 



English Goods shipped into Ireland. 

£ s d 

Beer 4 6 

Bricks, tiles, etc free 

Candles per lb free 

Cordage ton free 

Cider hhd free 

Glass sq. foot free 

" flint or enameled. per cwt free 

Leather per lb Id to 28 6d 

Paper, glazed per cwt 5 

Silkribbon per lb 2 1 

Gold mixed ribbons... "0 2 9 

Silk stockings, gloves, etc "0 1 3 
Miscellaneous silk, silk ware 

per lb 18 

Soap ... free 

Spirits .per gal 3 7 

Starch per lb free 

Confectionery " 10 

Tobacco " 1 ^4 

Snuff "00 lOJ^ 



* The charge is thus set forth in Battersley's " Kepealer's Manual ": "The amount of 
salaries given to those who held places during the King's pleasure, and whose votes 
mainly contrived to carry the Union, is set down at £G8,877; in addition there were 
twenty-six lawyers who received places ; two hundred borough mongers, who received 
for their votes £1,500,000. iVew Titles— 61 were given for marquises, 6 earls, 13 vis- 
counts, 3 viscountesses, 23 barons, 12 baronets. . . . The price of a single vote 
was familiarly known— it was £8,000, or a civil or military appointment to the value of 
£2,000 per annum. They were considered by the government party simple, who only 
took one of three. The dexterous always managed to get at least two of three, and it 
would not be diflicult to mention the names of twelve or twenty members who con- 
trived to obtain the entire three— the £8,000, the civil appoiutraent, and the military 
appointment." 



494 



ECONOMIC PHILOSOPHY. 



The decline in the manufacturing industries of Ireland, in the 
thirty years following the repeal, and even prior to the breaking 
out of the potato rot, and the Irish famine of 1846-9, reduces the 
problem of the unfitness of any one race of men to rule another, 
to the definiteness of a demonstration in mathematics. The 
thirty years, preceding 1800, were years of as great prosperity in 
Ireland as in England, and of a growth in population which, if 
continued to the present, would have given Ireland to-day 20,- 
000,000 people. It is difficult to estimate the amount of profit, 
made by English manufacturers and merchants, out of the sub- 
version of Irish industries.* They sold increasinglj-, in Ireland, 
the goods of every kind which Irish artisans had been making 
previous to the Act of Union. Temporarily, therefore, in all 
these thirty years the Union must have brought to English mills 
exactly the grist they sought. 

Up to 1846 the Irish people, who were so largely driven out of 
manufactures, continued to have some protection on then- agri- 
culture in the form of a duty on the importation of corn. In 



* The following tables show the subversion of Irish industries : 

NUMBER OP MEN EMPLOYED ATi'TTl'Tt 
BEFORE THE UNION. 

1800 Limerick, one branch of trade 15,000 1831 None 

" Cork, glove makers, " '• 3,000 " 500 

" " shoemakers, " " 300 " 100 

" Toughal, 7 large tanneries " None 

" " wool combers ^200 " 12 

" Dublin, all trades 30,000 " 10,000 

" " prosperous weavers 5,000 " 100 

" " stocking making 600 " None 

" Drogheda, stocking making 2,000 '* 600 

" Dublin, liberty's weavers 4,000 " 100 

" Kilkenny, 1 parish, St. Canice 4,000 " 98 

" Carrack, one branch of trade 5,000 " 40 

" in all Ireland, working at cotton 30,000 " 500 

" ' " liuenyarn 20,000 " 3.000 

" Dublin, silk weavers 15,000 " 441 

Dublin, 1800, master woolen manufacturers 91 1840 13 

" " hands employed 4,918 " 603 

" " master wool combers 30 " 5 

" " hands employed 230 " 66 

" " carpet manufacturers 13 1841 1 

" " hands employed 720 " None 

Kilkenny, 1800, blanket manufacturers 56 1822 42 

" hands employed 3,000 " 925 

Balbriggan, 1799, calico looms at work 2,500 1841 226 

Wicklow, 1800, hand looms at work 1,000 " None 

Cork, " braid weavers 1,000 1834 40 

■' " worsted weavers 2,000 " 90 

" " hosiers 300 " 28 

" " cotton weavers 2,000 " 220 

" " wool combers 700 " 110 

" " linen check weavers • 600 " None 

" " cotton spinners ble<ichers, cali- 
co printers by thousands " None 

The importation of raw silk for manufacture shrank from 144,275 pounds to 3,190 
pounds in 1831. Shoes exported to America declined from a value of $70,000 to notli- 



IRISH FAMINE. 495 

that year the duties on corn were repealed. There had been a 
"blight"' in 1831, caused by that continual cropping- of land to 
one or two crops without I'otation, which is the necessary mode 
of tilling the soil where no sufficient or near markets exist. The 
potato rot of 1846 would never have occuri^ed, if the modes of 
agriculture had continued to be what they were before the Act of 
Union. In the year of the repeal of the corn laws, therefore, the 
great famine descended upon Ireland, for causes as insej)arably 
resultant from the economic policy of England as were the 
similar famines in India. The result goes far toward proving 
that those large aggregations of men, which we call nations, have 
not yet advanced to the possession of a conscience, or an economic 
intelligence. The taxation of one nation by another, in the form 
of profits on its enforced trade, in the degree that barely enriches 
the taxing nation, but plunges the taxed nation into famine, 
while it is really a form of pei'secution more painful than rack, 
stake, or thumbscrew, more unprincipled than the Inquisition and 
more desolating than the crusades, still receives the polite genu- 
flexions of thousands, and is called free trade. 

ing. The export of fish, soap, candles, disappeared. Shipping employed in carrying 
Irish commerce shrank to one-flfth its previous tonnage. Forty vessels had once car- 
ried Irish goods to Newfoundland. None were any longer required. The consump- 
tion of tea by the Irish people shrank to one-twentieth in 1831 what it had been in 1786. 
Before the Union, 200,000 people were employed in factories. In 1850 only 24,735. 
— [" Why Ireland is Poor," by John P. Scanlon. 



CHAPTER XIII. 

TAXATION CONTINUED. 

187. France — Conditions. — The practice of France, in rais- 
ing revenue, is as little studied in the United States, as that of Ger- 
many, or Russia. Yet the conditions, of each of these countries 
are more nearly like those of America, than are those of En- 
gland, whose precepts, if not whose practice, Americans give more 
attention to, than to those of any country outside their own. 
According to the French census of 1872, a slightly greater propor- 
tion of the people of France are maintained by agriculture, than 
of the United States, according to its census of 1880. In France, 
out of a total population of 35,121,992, no less than 18,513,325, or 
52.71 per cent., were tillers of the soil, or members of their fam- 
ilies. The number in mines and manufactui'es (classed as indus- 
trial) were 8,451,344, being 24.06 per cent., 8.43 per cent, of the 
people being in commerce, 2.51 per cent, in transport, credit 
banking, and commission, 0.62 per cent were clergy of all relig- 
ions, 5.99 per cent, were annuitants, 1.56 per cent, were in the 
armed force, and 1.56 per cent, in the administration of the gov- 
ernment.* It is remarkable, in contrast with England, that the 
number of those doing business on their own account, as propri- 
etors and managers, are 6,674,248, while the total of those acting 
under direction of others in production, as directing overseers, 
workmen (ouvriers), and day-laborers, amount to only 6,151,726. 
The families, including the domestic servants, of those who are 
their own entrepreneurs, or employers, in the work of produc- 
tion, number 21,604,526, or about two-thirds in a total of 
34,356,081. 

Every alternate man, in France, is his own employer. In Great 

* "Condition of Nations," by Kolb. 



INDUSTRIES OF FRANCE. 497 

Britain about seven-eighths of the people are wage- workers. The 
land is officially parcelled into (in 1842) 126,210,194 parcels, which 
are held by 11,053,702 proprietors, with the allowance that one 
person is counted as many times as a proprietor as he owns land 
in difPerent districts of taxation. Out of 5,970,171 men and 
women engaged in agriculture, 2,689,302 cultivate their own 
land. Women form more than a fourth of the working force in 
agriculture, a third in mining and manufacturing industries, a 
fourth in commerce, a third in miscellaneous occupations, and 
six-sevenths of those in religious orders, as monks and nuns.* 
The nuns largely outnumber the entire male clergy, both secular 
and recluse. About 2,000,000 of the people live by the cultiva- 
tion of the vine, directly, apart from those engaged in the manu- 
facture of wine, the annual product of which is 50 gallons per 
capita for the whole population of France,! worth about £1 19s. 
8cZ. per gallon. The manufacturing industries employ directly 
1,782,932 persons, and the value of their product is £390,240,000. 
They must directly support, therefore, about 5,000,000 persons. 
The total value of the foreign trade of the country is about the 
same as that of the United States. J 

In 1886, one-third the population could neither read nor write, 
11+ per cent, could only read, and 56 per cent, could both read 
and write. In 1855, the total amount expended by the state, the 
departments, communes and individuals upon school and edu- 
cation was £1,300,000 (of which only £240,000 was expended by 
the state), against £18,520,000 expended for land and sea forces, 
and £22,400,000 for the national debt. Only one-third of the 
population live in towns of more than 2,000 inhabitants. Two- 
thirds are officially described as living in "flat country." There 
is almost no emigration from the country (less than 20,000 per- 
sons a year), and the increase of population is very slight. The 
government is highly centralized. Whether its form be imperial, 
kingly, or republican, the central power at Paris maintains 
a close grip on the appointment of mayors of cities, prefects of 
police, and other executive officers throughout the country, and 
reserves to itself the collection of aM revenues and the control of 
all police. In the sense in which the phrase ' ' local govern- 
ment" may be used in America, England, or even Russia, there 
is very little local government in France. 

* Males, 13.103. Females, 84..300. + In 1875, it was 1,720,527,842 gals, 

t ^- 1878^g-[|;|^03g.|jOOjF,relgn trade, £368, 028.00C. 



498 EOONOMIG PHILOSOPHY. 

188. France— Revenues.— In 1878, the French budget of 
revenue foots up as follows : 

Direct Taxes : 
On land, poll, and movement tax, door and window, tax on in- 
dustries, etc £ 15,684,560 

Special Taxes : 
On horses and carriages, lands in mortmain, mines, billiards, 
weights, exclusive societies, and apothecaries' examin- 
ations 1,024,651 

Registration, stamps, Crown lands, sale of movables and prop- 
erty without heirs 25,518,400 

Prom forests .. . 1,523,904 

General customs duties, including those on sugar and salt 10,723,000 

Indirect Taxes : 

Proceeds of tobacco monopoly £12,859,000 

" gunpowder 547,040 

Duty on drinks 15,967,000 

" home sugar 4,910,360 

With duties on salt, matches, chicory, paper, oil, soap, candles, 
vinegar, railway passengers, other passengers, dynamite 

factories, in all amount to a total for indirect taxes of 42,265,130 

Postal revenue 4,555,040 

Sundries 4,915,941 

other sundries 634,579 

Extraordinary sources . . 2,920,227 



Total revenue £109,865,132 

Such an exhibit does not show clearly how much of this 
revenue is collected on imports, but the amount is currently stated 
at from $65,000,000 to $75,000,000. Wool of all kinds is free of 
duty, since 1881, as against a duty of 25fr. per quintal, previously 
existing. As France has about 25,000,000 sheep, this is a with- 
drawal of j)rotection from the wool-grower. Sawed marble is free, 
but sculptured marble pays protective duties. Every form of iron 
pays duties on its importation, proportionate to the amount of 
labor invested in it, except iron dross and slag. About fifty kinds 
of chemicals, thirteen kinds of colors, and ten kinds of dyes, includ- 
ing Prussian blue, pay protective duties. Starch, wax, feathers, 
glass in plates, yarns, threads, warps and tissues of flax, hemp, 
jute, cotton, wool, and silk, paper of all kinds, pasteboard, dressed 
skins, belting, morocco, watch and clock movements and materials, 
nails, j)lanks, boards, tackle, apparel, and furniture of ships, but- 
tons, cattle, sheep, hogs, game, poultry, turtles, fresh and salted 
meats, butter, honey, whale oil, and sperm, petroleum oil, 
(much heavier on the refined than on the crude), lemons, 
almonds, camphor, dyes derived from coal tar, and numerous 
other raw materials and finished products, all pay duties, and 
those duties necessarily work protection to the French producer, 
wherever the article is produced in France, and the imported arti- 
cle competes with the domestic. 



PROTEOTl VE D UTIE8. 499 

For the year 1883 the product of state taxes was $608,603,151.* 
The direct taxes, viz., taxes on public hinds, forests, real estate, 
houses, apartments, billiards, etc., produced $146,290,951. Of in- 
direct taxes the registration tax, being a tax on the formation of 
new companies, and the transfer of houses and landed property 
by purchase, is the most productive. The other indirect taxes are 
stamps, which are virtually taxes on trading and exchange, and 
excise, which are taxes on consumption. The entire indirect taxes 
for France and Algeria yielded $453,006,705. The customs duties 
yielded $71,301,920 for France, and $1,505,593 for Algeria. The 
customs duties in France, therefore, form only about one-eighth 
of the whole revenue, which seems a much smaller proportion 
than in Great Britain or the United States. Possibly this differ- 
ence may be owing, however, to the fact that in the latter coun- 
tries there is a large local revenue not counted as national, which 
in France, owing to its more centralized system, is included in the 
national revenue. The articles which are imi)orted free are i^aw 
and waste silk, cotton, wool, flax, hemp, jute, skins, lard and tal- 
low, undressed fur, skins, guano, oil fruits and oil seeds, sow- 
ing seeds, exotic gums, timber, staves, wood, saffron, indigo, 
copper, lead, pewter, and zinc — in all of the value of $383,427,521. 
These articles are almost wholly obtained by import, and there is 
almost no production of them for export. 

The articles whose importation is chiefly charged with protec- 
tive duties are manufactures of cotton, flax, hemp, jute and silk, 
yarns and tissues, cattle, horses, mules, cheese, colonial products, 
including foreign sugar, coffee, cocoa, tea, pepper, etc., refined 
and raw French sugar, coal and coke, perfumery, wines, brandy 
and spirits, mirrors and bottles, paper and pasteboard, dressed 
skins, manufactures of leather, jewelry, manufactures of metals, 
fancy goods, manufactures of wood, wearing apparel, and other 
articles. 

Of most of these the export is much larger than the import. 
Of manufactures of leather the export is twenty times greater 
than the import ; jewelry, nine times ; metals, three times ; 
fancy goods, ten times ; wearing apparel, twelve times ; brandy, 
six times ; manufactures of cotton, flax, hemp, jute, and silk 
three times, and perfumery sixteen times. But of cattle the im- 
port is eight times greater than the export. 

* Uuited States Consular Eeports, No. 51, March 1885, p. 519. 



500 ECONOMIC PHILOSOPHY. 

The French divide their foreign trade as follows (in millions of 
dollars) : 

Imports. Exports. 

1. Alimentary substances $378 221 Total of Imports. $1,150 

2. Articles essential to industry.. 502 200 " Exports, 919 

3. Manufactures 269 497 

Total Foreign Trade, $2,0G9 

189. France, as Discussed by Smith. — Adam Smith* dis- 
cusses a class of retaliating duties levied by England and France, 
each on importations from the other only, at a different rate from 
the duties levied by the same countries on the like goods coming 
from Spain, Portugal, or Germany. He seems to discuss these as 
if they were illustrations of the principle of protection. The 
desire to injure another nation, however, is a wholly unlike 
motive to the wish to benefit home industries. 

It must not be supposed that such duties bear any resemblance 
in principle to modern protective duties. We are not aware that 
they have had any existence in the legislation of the present cen- 
tury. Excessive duties laid by England on French wines, while 
admitting similar wines free, or at low rates of duty, from Portu- 
gal or Germany, when England was not seeking to cultivate wines, 
and had no interest in their cultivation in France or Germany, 
would draw as indignant comment from any modern protection- 
ist, as from any free trader. Duties levied from motives of mal- 
ice toward a particular country, and from which other countries 

* " Wealth of Nations, book iv., ch. iii. p. 208," says : "'To lay extraordinary re- 
straints upon the importation of goods of almost all kinds, from those particular coun- 
tries with which the balance of trade is supposed to be disadvantageous, is the second 
expedient by which the commercial system proposes to increase the quantity of gold 
and silver. Thus in Great Britain, Silesia lawns may be imported for home consump- 
tion, upon paying certain duties ; but French cambrics and lawns are prohibited to be 
imported, except into the port of London, there to be warehoused for exportation. 
Higher duties are imposed upon the wines of France than upon those of Portugal, or 
indeed of any other country. By what is called the impost of 1692, a duty of five-and 
twenty per cent., of the rate or value, was laid upon all French goods, while the goods 
of other nations were, the greater part of them, subjected to much lighter duties, sel- 
dom exceeding five per cent. The wine, brandy, salt, and vinegar of France were in- 
deed excepted ; these commodities being subjected to other heavy duties, either by 
other laws, or by particular clauses of the same law. In 1696, a second duty of twenty- 
five per cent., the first not having been thought a sufficient discouragement, was im- 
posed upon all French goods, except brandy ; together with a new duty of five-and- 
twenty pounds upon the tun of French wine, and another of fifteen pounds upon the 
tun of French vinegar. 

" The French in their turn have, I believe, treated our goods and manufactures just as 
hardly ; though I am not so well acquainted with the particular hardships which they 
have imposed upon them. Those mutual restraints have put an end to almost all fair 
commerce between the two nations, and smugglers are now the principal importers, 
either of British goods into France, or of French goods into Great Britain." 



TUTOR VS. PREMIER. 501 

are exempted, and. levied on commodities in whose production the 
country imposing them has not, nor seeks to have, any interest, are 
not laid from an economic, nor even from a selfish, motive, but 
from tlie blind fatuity of passionate liatred. 

Dr. Smith, however, dates the i^rotective policy in France from 
Colbert, who, in 16G7, " imposed yqvj high duties * upon a great 
number of foreign manufactures." Upon his refusing to mode- 
rate them in favor of the Dutch, they, in 1671, prohibited the 
importation of the wines, brandies, and manufactures of France. 
Smith attributes to Colbert also t a prohibition of the export of 
corn, in order to favor domestic manufacturers who needed 
cheap breadstutfs. 

Dr. Smith's complaint against the different systems, both of 
customs duties and excise, prevailing in different parts of France, J 
was timely in its time, and doubtless had much to do with in- 
ducing the United States, in the subsequent adoption of their con- 
stitution, to guard against any similar restrictions upon tlie inter- 
state trade of our various states. Dr. Smith boasted of the greater 
freedom of internal trade at that date in England, as compared 
with France, and with jvistice. It does not abate, however, the 
ground of complaint heretofore made against Great Britain, that in 
her tariff system, she never recognized Ireland, as having like title 
with England, to the benefits of protective legislation. The re- 
strictions on the internal trade of France, against which Dr. 
.Smith complained, disappeared in the French Revolution in 
1789. 

Dr. Smith acknowledges the great patriotism, abilities, and 
genius for detail, of both Colbert and Turgot, who founded the 
protectionist system in France. He says the most intelligent men 
in Fi'ance think they were mistaken. Dr. Smith should not have 
dodged behind " the most intelligent men in France," to state his 
own opinion, for three reasons : 1. There are no means of deter- 
mining who are the most intelligent men in France ; 2. When 
they are discovered, there is no means of determining whether 
they think Colbert and Turgot were mistaken ; 3. If it were deter- 
mined that they thought so, it is still evident that they might be 
mistaken, since to affirm that Colbert and Turgot were them- 
selves mistaken, they being confessedly two of the most intelligent 
men in France in their day, is to affirm that the very authority to 



'" Wealth of Nations," p. 206. t " Wealth of Nations," McCulloch'ecd., p. 1.'99, 

X " Wealth of Nations," p. 408. 



502 ECONOMIC PHILOSOPHY. 

which Dr. Smith appeals, viz., the most intelUgent men in 
France, might err. 

Dr. Smith, moreover, does not analyze impartially, or at all, the 
actual protective measures adopted first by Colbert and afterward 
by Turgot, in the century following 1667, nor compare them with 
their effects. The system of duties then levied aimed to draw 
into France the manufacture of porcelains, glass, earthenware, 
and china, silks, satins, velvets, and plushes, fine woolens, iron 
and steel, wooden ware, soaps, candles, oils, cosmetics, perfumes, 
watches and jewelry, leather, boots, shoes, gloves, and the like. 
Did the measures succeed ? is the simple question of history, to 
which Adam Smith, with the ample learning at his command, 
and with his experience as a ti^aveler through France, in the 
capacity of intellectual valet de chambre to a nobleman's son, 
should have addressed himself. He certainly knew whether 
these manufactures had grown or declined, under the influence of 
these " mastei's of detail," whom the " most intelligent men in 
France " thought to be mistaken. But Dr. Smith neither names 
these "most intelligent men in France," nor adduces the data to 
show that manufactures in France did not grow, in spite of the 
untoward effect of religious persecutions against the Protestants, 
driving out by thousands the very artisans whom Colbert and 
Turgot were trying to invite into the country by the protective 
system. 

On the contrary, Dr. Smith mixes up his discussion of the pro- 
tective system, as adopted in France, with statements of the 
merely spiteful systems of retaliation against France only, 
adopted by England and Holland, as if the two notions of trying 
to injure another nation's trade, and to build up a nation's own 
internal trade, were identical. He discusses, in the same connec- 
tion, the intei'ior revenues collected on goods passing from one 
French province to another, as if these were protective duties, 
when he must have known that they were what Colbert and 
Turgot labored to remove, as the chief obstacles to a protective 
policy. 

In the same connection he derides the Frencli owners of 
vineyards, in 1731, for inducing the government to order that no 
more vineyards should be planted, and that vineyards which had 
been idle two years should only be planted by special leave of the 
king, on showing that the land was good for no other use. Per- 
haps some analogy might be found between even this order and 
the action of the British government, in limiting the circulation 



EXPERIENCE WITH SUGAR. 503 

of bank notes to the volume of notes existing at a given date. 
But, whether so or not, it has no bearing on the question whether 
the systems of protective duties, inaugurated in France by Col- 
bert and Turgot, aided largely in giving France her national pres- 
tige in Euz'ope, in uniting her people, and in preventing their 
dispersion by immigration, in the manner that characterizes the 
Ijopulations of Grreat Britain. 

French statesmen, from Napoleon to Guizot, Chevalier, Thiers, 
and Gambetta, have with great uiianimity maintained the pi'O- 
tective system. J. B. Say, Leon Say, and Bastiat among French- 
men have written against it. Protection in France, therefore, 
has a record of experience. To it, France owes the introduction 
of her glass, porcelain, silks, raw silk, leather, including moroc- 
co, woolens, hosiery, jewelry, iron, and steel, sugar, and perhajis- 
the maintenance even of her grape, wine, and cosmetic indus- 
tries. To detail the rise of each of these would be to write a his- 
toiy of the protective policy in France, which would be a history 
of France itself. We confine ourselves to a single example, 
that of beet sugar. 

190. Taxation as a Cause of Production— Beet Sugar. 
— Tliough the cane was grown in China, Japan, and India from 
the earliest times, honey was the only form of sweet known in 
Western Asia, Europe, or Northern Africa, until the conquests 
of the Saracens. Cane sugar only became a staple of commerce 
after the introduction of the cane into the West Indies. The fact 
that sugar could be abstracted from the beet was first made known 
by Margraff, a Prussian chemist, in 1747, and Achard, another 
Prussian chemist, first attempted, under the patronage of Fred- 
ei'ick the G-reat, to enter upon the culture of the beet and manu- 
facture of beet sugar at Caulsdorff , near Berlin. He published 
an account of his work inthe Annales de Chimie (Paris), calcu- 
lating that sugar could be produced at 5^ cents per pound in 1799, 
and predicting that the industry would become profitable. The 
first two sugar-beet factories established near Paris, on the basis 
of Achard's statements, failed with heavy loss to the investors. 
The French Institute reported that beet sugar could only then 
be made at a cost of sixteen cents per pound. Such was the sus- 
pension of intercourse between France and the West Indies, and 
the general high prices, that sugar in Paris reached fiftj^ cents per 
pound.* Napoleon appreciated the great importance of making 

* Greeley's " Political Economy," p. 189. 



504 ECONOMIC PHILOSOPHY. 

the manufacture of sugar a success in France, and appeared to 
have a prescience of the magnitude it attained. He first 
encouraged chemists, agriculturists, and manufacturers per- 
sonally to resume their work. In 1810 these efforts resulted in 
two loaves of excellent home-made sugar being presented to the 
emperor. He caused 80,000 acres of land to be set apart for the 
culture of beets, confided a considerable sum to the minister of 
agriculture to encourage the work, instructed the prefects of the 
several departments to cause similar experiments to be concur- 
rently made in every department, established five schools of 
chemistry in aid of the manufacture, and provided four imperial 
factories, calculated to produce, from the crop of 1812, nearly 
5,000,000 pounds of beet sugar. The overthrow of Napoleon con- 
verted the factory into the quarters of a pulk of Cossacks. From 
1816 to 1837, the English never tired of pointing out to the French 
the magnitude of the loss they were sustaining, in paying two or 
three cents per pound more for their sugar than the English. 
Dr. Wayland once made up a calculation, based upon supposi- 
titious and hypothetical assumptions, which Mr. Greeley shows * 
to be very wide of the truth, in which he figured that the annual 
interest on the increased cost of their sugar to the French people 
would pay for all the sugar they would ever need to consume. 
The same formula has since been adopted by others, as a means 
of showing that the United States could more cheaply obtain all 
its iron and steel by importation than by manufacture. Dr. 
Wayland made up his case by assuming that the English price 
for sugar was 2^d. when it was S^d., that England with half 
the number of inhabitants consumed two and a half times as 
much sugar as France, that France was consuming less by one- 
third than it would if it relied on importation for its supply, and 
was paying £1,400,000 per annura more for it, and that its beet 
sugar would not come down to the price of cane sugar in twenty 
years, f 

* Greeley's " Political Economy," p. 193. 

t Mr. Greeley's reply is a terse and vigorous argnment, demolishing a pompous pre- 
tence. He said : " Dr. Wayland is all wrong in his facts. The actual average price 
of sugar in iond (that is, duty unpaid) in London in that year, 1837, was not Z^d. per 
pound, as he asserts, but£l 145. "id. per cwt., equal to Z7-\Qd. per pound. Then, in 
regard to the consumption of sugar in France and England, I find that, in 1837, the 
quantity consumed in France was 249,058,8-33 pounds, and in England 442,838,7'20 pounds, 
which is not double — not 75 per cent, greater. The duty in France on sugar from her 
own colonies was .37*. &d. ; in England, the average duty was 24s. In reference to 
the price, the present Emperor of the French, writing in 1848 on the sugar question, 
said; 



BEET SUGAR WINS. 505 

Mr. Greeley showed that, in 1865, France was making 678,287,- 
040 pounds of beet sugar, or more than five times the quantity 
which Dr. Wayland had estimated, thirty years earlier, would 
be required for the consumption of France. From the year 
1837 onward, the beet culture and sugar manufacture became 
strong enough to bear a heavy excise tax. From 1840 to 
1860 the protection afforded to home-grown sugar was only 
from one to three cents per pound. Since 1860 the home- 
grown beet sugar has borne rather more tax than the colonial. 
In 1875, the production of beet sugar in France reached 
9,397,584 cwt., and paid in excise taxes to the government 
£4,698,680 i^evenue. This was the product of 508 factories. 
In Germany, Holland, Belgium, Austria, and Russia, the beet 
cultui^e has also risen to formidable dimensions — Germany alone 
in 1878 exporting, chiefly to England, 2,363,000 cwt. 

To-day, more than one-half the sugar sold in British an€. colo- 
nial markets, is beet sugar exported to these markets from Bel- 
gium, Germany, and France.* The British government has been 
besieged, both by its British sugar-refiners and its sugar-gi-owers 
in Jamaica and the Mauritius, to do something to check the 
increasing cheapness of beet sugar, as it is rendering it absolutely 
impossible to grow cane, or refine sugar, at a profit. The Jamaica 
colonists have authoritatively expressed a desii'efor union, either 
Avith Canada or with the United States, and have indicated that 
unless cane sugar can be granted the boon of a protected market 
it must soon become extinct as an industry. 

The fashionable style, among the English economists, is to com- 



" 'The price of sugar, which, nnder the Empire, was 9 francs per kilogramme, has since 
fallen to 1 franc 10 centimes ; and though then protected and encouraged, it has now 
to support a tax of 27 francs per 100 kilogrammes ; or, together, a difference, to the 
detriment of the manufacturers, of 817 francs, per 100 kilogrammes.' 

" Deducting from 110 francs, the price of 100 kilogrammes of sugar at 1 franc 10 cen- 
times per poiind, the duty of 27 francs, leaves 83 francs as the price of the sugar ex- 
clusive of duty- According to Reed's ' History of Sugar,' the price of susar m hond 
in London was then 36.s. llrf. per cwt.. or 86 francs 9 centimes per 100 kilogrammes. 
So that, only five years later than when Dr. Wayland wrote, beet sugar was cheaper in 
France than cane sugar in its cheapest European market ! " 

* In 1812 to 1816 one of the English doggerels or songs ran : 

" Says John Bull to Bony, While I use the cane 
You are welcome each year to get beat." 

To this the modern reply might be : 

When Bony began on his cheap-sugar plan. 

With your cane you led us a dance, 
But my ! what a go ! to sweeten, you know. 

All your toddies with three lumps from France, 



506 ECONOMIG PHILOSOPHY. 

plain of what they are pleased to term the "bounties on the ex- 
port " of French and German sugar. There is no such bounty 
either in France or Germany. All that either government intends 
to do, in favor of exported beet sugar, is to remit whatever internal 
taxes it has paid. This, it is believed, most governments do, in be- 
half of their exports. English economists and petitioners protest 
that rebate is paid on the export, in excess of what the sugar has 
paid the government, not indeed by legislative design, but by 
oversight. If the French government does more than repay the 
duty, it is probably done in -the same way as in Germany, where 
the method of paying an alleged duty on the export is thus ex- 
plained by our Consul-Gen eral Vogeler in 1885.* He says : "The" 
government assumes that it requires eleven hundredweight of 
beets to produce one hundredweight of sugar. At this rate the 
-tax is levied. But by improved 'methods and machinery, the 
manufacturer gets one hundredweight of sugar from nine hun- 
dredweight of beets, and being refunded at the rate mentioned 
above, he would get back xt more tax than be has paid. This 
premium being paid out of the general fund obtained by taxing 
the beets consumed, it follows that the greater the quantity of 
sugar exported, the less must be the revenue derived from the 
sugar-beet tax." Consul Vogeler says that sugar factories have 
sprung up all over Gei^many. They are built at a cost of $50,000 
to $300,000. In the fall of 1881 there were 338; in 1884, 390 ; and 
he thinks the number in Germany now approaches 500. Up to the 
year 1843 the dividends paid by these factories had in many cases 
reached 40 per cent, per annurn, and 15 to 25 per cent, was very 
common. The price of raw sugar had fallen from $6.84 per hun- 
dredweight in October, 1881, to $4.42 in October 1884. The price 
of beets has in consequence fallen, from about 28 to 30 cents per 
hundredweight, to 15 to 18 cents. The quantity of sugar beets 
produced in Germany in 1884 was 1,200,000 tons, and the export 
of sugar was 600,000 tons from Germany, France, and Belgium. 
191. The Sopliisms of Bastiat. — While the historj^, experi 
ence, and statesmanship of France have all vigorously argued 
for protection to domestic industry, as one of the first and most 
important functions of government, many persons in America, 
who have had no time to become familiar with either of these, 
have been amused, and in some cases misled, by the light, chirrupy, 
and frisky ingenuities of Bastiat, some of which almost rise to the 

* U. S. Consular Reports, No. 51. 



BASTIAT'S SOPHISMS. 507 

dignity of humor. ' ' Of Bastiat's ' ' Harmonies Economiques, " the 
condensed truth is that, if Mr. Carey had not previously ex- 
pressed the same ideas, there is no reason to suppose they would 
have occurred to Bastiat. His plagiarism stands conceded. The 
work, however, with which Americans are most familiar is his 
' 'Sophisms of Protection. " The title ' ' sophisms of protection " is 
a miisnomer. Protection is an active, practical policy, which has 
been followed more completely by France, Great Britain, Ger- 
many, Russia, the United States, Italy, and Austria, and less per- 
fectly by the minor nations, ever since taxation has come to be 
studied in connection with international commerce. It is not a 
speculation of the schools, does not rest on a priori reasoning, 
any more than military tactics or republicanism, and can not be 
overthrown by it. As it would be idle to talk of the sophisms of 
steam railways, or of rifled cannon, or iron-clads, or of army 
corps, or the electric battery, or the dykes of Holland, so it 
is idle to speak of the " sophisms" of a practice of all the leading 
governments of the world, which has been tested for centuries. 
Since no first-class government has ever entirely departed from 
it, it therefore may be a success or a failure, a cause of wealth 
or of poverty, of progress or decline, among nations, but it can 
not, by any process of thought, be made a mere "sophism " or 
mistake of reasoning. On the contrary, "free trade" has never 
in fact been reduced to practice by any nation, still less by 
any two nations. It has been used as a party cry to cover various 
forms and modes of intended j)rotection to the industries of the 
country adopting it. It would be much more natural to look for 
sophisms in this speculative theory, so foreign from the practice 
of governments, and so much in favor with visionary dreamers 
who have never had aught to do with the practical work of leg- 
islating, either to obtain a revenue with the least jpossible injury 
to industry, or to satisfy a constituency, whether of producers 
or of consumers. 

Bastiat begins by attributing to protectionists the sophism 
that the " scarcity" which is obtained by checking the importa- 
tion of an article, as a means of promoting its domestic produc- 
tion, is better than the abundance of the article which would re- 
sult from its unrestricted importation. This he generalizes into 
the supposed protectionist sophism that ' ' scarcity is better than 
abundance," and by attributing to them this belief he is able to 
argue, with very plain sailing, the general proposition that 
abundance is better than scarcity. 



508 ECONOMIC PHILOSOPHY. 

Let us weigh this perversion in the light of the actual exigencies 
of government. A government must either tax its domestic pro- 
ductions, or its importations, or both. It has no other choice. If 
it taxes the domestic production it promotes scarcity by diminish- 
ing that production, just as clearly as if it taxes the foreign. The 
tendency of all taxation, to promote scarcity of the thing on which 
the tax is collected, is unavoidable, except in a few instances, and 
those occur solely among protective duties. The practical ques- 
tion is whether the tax shall be so laid as to cause scarcity of the 
domestic production and an increase of the importation, or a 
scarcity of the importation and increase of the domestic produc- 
tion. The free-trader puts the tax where it will stimulate the 
foreign production of the thing taxed ; the protectionist where it 
will stimulate the home production. For instance, as to iron : 
The free-trader would tax the tea, coffee, sugar, liquors, tobacco, 
clothing, and income of the domestic iron- worker, so as to raise 
his cost of living, and hence his wages. He would place stamp, 
license, transportation, and manifold other taxes on every process 
of industry incident to the manufacture of American iron, so 
as to increase, by 20 or 30 per cent., its cost of manufacture. 
Then he would admit foi'eign iron untaxed, in order to get it 
cheap. Of course the American manufacture, on which, owing 
to the bulk and weight of the article, we must largely depend for 
supply, would shut down, at least for a time. For it is natural 
that a very lai'ge source of suppiy, capable of turning out millions 
of tons a year, should be stopped by the presence of a very small 
actual surplus, say of a few tons, which are held low enough to 
place the large product at a loss. But the shutting-down of a large 
Aiiierican source of supply, equal, say, to nine-tenths of our whole 
demand, would speedily produce a greater scarcity, and therefore 
dearness, than the free admission of a small foreign supply had 
produced, of abundance and cheapness. This would stimu- 
late the foreign manufacture, and cause a rise in the foreign 
price, proportionate to the scarcity caused by the cessation in our 
domestic production. Of what avail, then, is Bastiat's " scarcity 
and abundance " theory ? His free trade promotes scarcity of 
domestic iron. Protection promotes scarcity of foi'eign iron. 
Free trade would prolong the ' ' scarcity " of. iron forever, because 
no country can ever have iron plenty, unless it produces it plenti- 
fully. Protection would render iron ultimately abundant and 
cheap, by causing its abundant production. Our product of iron, 
which, in 1840, had been a hundred years gTowing up to 347,000 



EXPERIENCE IN IRON. 509 

tons, under the protective tariff of 1842, doubled up to 765,000 
tons in 1846. Did this increased production make iron dear ? Its 
average from 1842 to '46 was from $24 to$36 per toia, while in the 
ten years of preceding free trade it had ranged at from. $35 to 
$52. 50 per ton. The repeal of that tariff reduced the production 
to 564,755 tons in 1850,. while the importation of rails rose from 
15,161 tons in 1847 to 334,874 tons in 1853. Did our cessation in 
the pi'oduction of iron and this flood of importation make it per- 
manently cheaper ? Not so. The price, which was $71 per ton 
in 1847, fell at first to $61 in 1849, and touched as low as $47 in 
1851, and then, having utterly routed and destroyed the Ameri- 
can producers, it rose to $77 in 1853, and to $81 in 1854, under the 
full influences of foreign free trade. For ten yeai'S the iron busi- 
ness, notwithstanding the frequent high prices, had a weary 
struggle for life, becavise of its liability to be dashed by the sud- 
den fluctuations of the foreign markets — railroad bars fluctuat- 
ing from $81 per ton in November, 1854, to $58.30 in June, 1855, 
then up to $67 in the summer of 1857, and down to $50 in 1858, 
and $36 during our stringency of the winter of 1861-2. In 1860, 
during these fluctuations, our product of pig-iron was only 804,- 
000 gross tons, or, notwithstanding our great increase in popula- 
tion and in the need of iron, only 39,000 tons more than we were 
producing fourteen years before — our production during most of 
the intervening period being less than it was in '42-46. We have 
Been that, under free trade, prices were more fluctuating, but not, 
on the whole, as low as under protection, and that our production 
of iron was less. Did the importation continue to supply us 
abundantly ? Not. so. In the fij'st five years of free trade the 
importations swelled from 15,161 tons to 334,874 tons a year (in 
1851), but having by this time obtained the monopoly of our 
markets, the importers had been gradually raising the price on us 
until it stood at $78 all through 1853, and rose to $81 in 1854. 
This is the result of the boasted cheapness obtained by importa- 
tion. At tliis high price domestic production again came to the 
relief of consvimers, and the production of anthracite pig in- 
creased from 339,285 tons in 1854, to 441,110 tons in 1856, to 524,- 
531 tons in 1860, and to 684,018 tons in 1864. Under the protec- 
tive tariff enactments of 1862-64 and 1867 our product of pig 
metal, which had risen to only 607,000 gross tons in 1860, had 
risen to 1,865,000 tons in 1870, and to 4,500,000 tons in 1880, a 
clear increase in the first nine years of 1,130,000 tons, or 170 per 
cent, on the amount wliich the production liad attained in tlie pre- 



610 ECONOMIC PHILOSOPHY. 

vious century of progress, and in the second decade of about 
150 per cent, on the product of 1870. Facts and figures lilce 
these recur abundantly in the history of France. Her states- 
men, from Colbert to Napoleon, and from Napoleon to Chevalier 
and Thiers, have seldom swerved from the policy of protection to 
French industry, or to that vphich they conceived to be its de- 
mands. The scarcity, which results in checking an importation, 
may develop a domestic production, whose result will be a greater 
permanent abundance, and cheapness, than importation could ever 
have caused. The temporary abundance and cheapness which 
result from an untaxed importation, coming into competition with 
a variously and heavily taxed domestic production, may, by par- 
alyzing the production, create an ultimate scarcity and dearness 
greater than could ever be attained were the domestic production 
encouraged, and the price left solely to be determined by home 
competition. The protective policy makes scarcity, only as the 
sowing of the seed in spring raakes scarcity, in order that at the 
harvest there may be a greater abundance. Indeed, in all the 
phenomena of production, the first employment of the capital in- 
volved creates scarcity, i.e., lessens the capital available for con- 
sumption. The workingman imposes scarcity upon himself vol- 
untarily, in order to save enough of his money, which he might 
expend for daily consumption, to form a capital with which to 
engage in business. The capitalist sees before him always two 
purposes to which he can devote his means— the first in procur- 
ing an abundance of all the means of enjoyment, the second in 
productive industry. Every employment of his capital for pro- 
ductive industry is a withdrawal of some portion of what he 
might expend for consumable comforts — in short, is a cause of 
relative scarcity, in the sense referred to by Bastiat. But the tem- 
porary scarcity of wheat occasioned by the necessity of sowing 
the seed for future harvests, the temporary scarcity of consumable 
capital, occasioned by efforts to increase the amount of capital 
employed in productive industry, and the temporary scarcity 
caused by checking the importation of an article, which a country 
has all the unemployed resources to produce with as great ease, 
and in as great abundance, as any other country, are all alike in- 
stances in which the temporary scarcity and dearness are the 
inseparable conditions precedent to permanent abundance and 
cheapness. 

In his second chapter, Bastiat assumes that protectionists 
aim to increase the obstacles to production, under the false notion 



^WOttT AND MONEY. 511 

that the obstacles to production are the cause ; tliat, for instance, 
as labor is the cause of production, protectionists think that mode 
of production the best whicla requires the most labor. No protec- 
tionist had any such notion. In this chapter he italicises the as- 
sertion that labor is never without employment. This is a bald 
economic untruth. There have been periods in Ireland, alone, 
when two millions of people offered to work sixteen hours in 
the day for bread, and could not get work there, nor could they 
get where work was to be had. Had the labor of Babylon and 
Nineveh never been without employment, would those cities 
have been given over to the waste deserts ? Both labor and 
capital may fail of employment for long periods. The world's 
history nearly consists of the migrations of both to new fields of 
employment, and their adventures and sufferings by the wa,y. 

In his third chax^ter, Bastiat argues that progress consists in the 
increase in the proportion of the result to the effort, and charges 
protectionists with aiming to bring about that system of industry 
in which the effort is greatest and the results least. Let us see. 
Mr. Abram S. Hewitt, our commissioner on. iron to the Paris Ex- 
position in 1867, reported facts showing that one day's work in 
Pennsylvania, Wisconsin, or Missouri would make as much iron as 
two days' work in England or Belgium, or about two and a quar- 
ter in France. On Bastiat's basis, the propoi'tion of the effort to 
the result, the men then engaged in making iron in England, 
Belgium, and France should have been induced to remove as fast 
as possible to the United States, because here the result in iron 
was from two to tAvo and a half times greater for the effort in 
labor. The protectionist policy encouraged this ti'ansfer of iron 
production, and so increased the proportion of the result to the 
effort put forth, in accordance with Bastiat's desideratum. His 
error arises in supposing that the money price of labor is a meas- 
ure of the effort put foi'th. It is only a measure of the competi- 
tion between laborers. Blacksmiths put forth as much effort in 
one country as another, and attain about the same result, so far as 
the amount of work done is concerned. But in the United States, 
at the period referred to, they received $13. 10 per week, in gold ; in 
Great Britain, $6.33 ; in Prussia, from $2.52 to $4.32 ; in Saxony, 
from $2.52 to $3.60; and in Switzerland $5.40, according to an offi- 
cial rejjort of our bureau of statistics at Washington, Ii'on pud- 
dlers received $16.54 per week in the United States, $8.75 in Great 
Britain, $3.60 to $4.32 in Prussia, $3.12 to $4.32 in Saxony, and 
$1.92 to $4.20 in Belgium. Now, if no greater effort were required 



512 ECONOMIC PHILOSOPHY. 

to make the same amount of iron in those countries than in our 
own, G-reat Britain could sell iron for half what we could make it 
for, Prussia and Saxony for one-fourth, and Belgium for one-fifth. 
But they did not. Removing all duties, they would, at first, 
have sold iron to us for one-fourth less, until they had stopped our 
manufacture, and then the magnitude of our demand would have 
compelled them to ask more, under free ti-ade, than the previous 
price with duty added. But the fact that Prussians can only 
produce iron at three-fourths of the American price, when they 
pay one-fourth of the American wages, shows that their iron 
costs three times as much effort in days' work as ours, and 
hence that the world would be the gainer by 66 per cent., in 
the proportion of the result to the effort, if we should forbid 
the importation of a ton of Prussian iron, and compel German 
laborers, if they propose to make iron for our markets, to make 
it in this country. American protectionists generally would 
be satisfied if our tariff laws secured the production of those arti- 
cles in this country which we can produce with a larger propoi*- 
tion of result to effort than the people of any other country. 

M. Bastiat's third "Sophism of the Protectionists " is that they 
aim to equalize the facilities of all countries for production, aiid 
that it is from the differences between various countries in their 
facilities for production that trade arises, each country being able 
to export only that which it can produce more cheaply than any 
other country ; consequently that the adoption of the protection- 
ist policy would destroy trade. 

We answer, that it is also from the same differences of facil- 
ities for production, as between diffei'ent individuals, in any one 
country, that domestic trade arises, and that the international 
trade is always of far less importance than the domestic commerce 
of every country. Protection, by increasing the domestic produc- 
tion, increases the extent to which a people can exchange with 
each other at home, and diminishes the necessity only for going 
abroad. It lessens not the number of exchanges made, but only 
the distance to be traveled, and the transportation to be paid for, 
in making them. The ability of a people to make exchanges de- 
pends, ultimately, wholly on the amount of their production, 
which, in turn, depends primarily on their natural resources, sec- 
ondly on their advancement in mechanical invention, and thirdly 
and through the two first, on the diversification of their industry. 

There are 1,200,000 farmers in the Mississippi Valley, none of 
whom can make any exchanges with each other, because their 



HOME TRADE NEEDS. 513 

products are tlie same. There are a similar number of spiuiiers 
and weavers in England who can make iio exchanges with each 
other, because tliey are all producing the same thing. Bastiat 
thinks the continuance of this state of things increases the 
amount of commerce between these two classes of producers. We 
say it diminishes the amount of the commerce between the 
farmers and spinners to the lowest point ; that if one-half the 
spinners were in the Mississippi Valley it would quadruple the 
value of the present products of that region and of its land, and 
also largely increase the vahie of the product of their spindles. Is 
•there any doubt that in this respect we are looking at the aggre- 
gate of commerce, domestic as well as foreign, while Bastiat is 
looking only to the commerce that crosses the ocean, or some 
sti^ait or chaiinel of it ? So long as the whole people of the Mis- 
sissippi Valley ai'e farmers, while their weavers and cutlers are in 
Lowell and Sheffield, is not the commerce of the people of Illinois 
with each other paralyzed by the fact that their industries are 
homogeneous ? But if, of the people of Illinois, 3,000,000 were 
farmers, and 2,000,000 wei'e mechanics and manufacturei's, would 
not the exchanges of products then possible to them be infinitely 
greater than the exchange could be, so long as the two classes of 
industries are separated by thousands of miles ? Commerce 
grows, not out of the unequal powers of various peoples to pro- 
duce tlie same things, but out of their equal powers to produce 
different things. It is not inequality, but diversity of production, 
that promotes exchange. If a farmer in England raises sixty 
bushels of wheat to the acre, and another in France raises ten 
bushels, their inequality of production forms no inducement to 
them to trade with each other. But the farmer trades with the 
spinner, weaver, cutler, blacksmith, and carpenter, witliout re- 
gard to their equality or inequality of productive power. His 
trade is as profitable if they earn $5 a day and he earns $3, as if 
he earns $5 a day and they earn $3. Yet protectionists do not de- 
sire to create equality of production in competing branches, ex- 
cept as pi'eferable to inferiority of production on our own part. 
They prefer equality to inferiority, superiority to equality, and 
supremacy to superiority. But they deny Bastiat's " sophism," 
that our inferiority to Englishmen in any branch of production 
helps us to trade with them. It must be our production of un- 
like products, not of unlike values, and as the soil and climate of 
Europe present no natural differences from those of the United 
States, a given population transferred from Europe to America 



S14 IJGOmMiG PHILOSOPHY. 

can produce here every product in kind which they can there, but 
at a more rapid rate and with less effort. 

192. Modern Geriiiaiiy — Protective Taxation a Source 
of National Unity. — The power of Germany, which is now at- 
tracting the attention and admiration of the civilized world, has 
grown up in the brief space of sixty years, as the result of two 
intimately related policies, viz. : the general diffusion of literary 
and industrial education, and the protection of German manu- 
factures, agriculture, and mining, against foreign competition, 
through the Zollverein. Americans have special reason to be 
proud of German progress, since the efficient agent in effecting 
the Zollverein was Frederick List, author of a work entitled 
"The National System of Political Economy," and who, though 
German by birth, became imbued with the principles of protec- 
tion, during his residence in Pennsylvania. Prof. List was invited 
by Lafayette to accompany him in his tour of this coujitry, and 
came only as a visitor and observer. He had previously edited 
an edition of J. B. Say's treatise on political economy, and his 
leanings were toward free trade. During his stay in this coun- 
try he became familiar with its economical history, and reversed 
his opinions as to the effects of unrestricted foreign trade on do- 
mestic manufactures. He learned that our Federal Union grew 
out of an attempt to form a customs or commercial union, with 
free trade between the various states, and protection against 
foreign competition, as its guiding principle. He became familiar 
with the unitizing effects of such a union, and with the gratify- 
ing results to our manufactures and general industry, during the 
years from 1806 to 1815, in which commerce with England was 
interrupted or neai'ly destroyed, and the disastrous effects of the 
free trade treaty of 1816, which flooded American markets with 
English goods, swamped our manufactures, and in three years 
brought every branch of industry to the lowest stage of suffering 
and ruin. Thoroughly indoctrinated in the Pennsylvania school 
of political economy, of which Matthew Carey was then a lead- 
ing expounder, Pi'of . List returned to Germany filled with the 
purpose of agitating for the adoption of the principle of protection 
to German industry, through a Zollverein, of which Prussia had, 
since 1818, been the proposer and exponent, while Hanover and 
other German states, largely influenced by England, had formed 
an opposing combination in favor of free trade. The dream of 
List was of a united Gei^many, bound together by a netwoi'k of 
railroads centering in Berlin and Frankfort, collecting its whole 



RISE OF OERMANt. 615 

revenues in an exterior line of custom houses, under laws so 
framed as to secure the freest possible intercourse within the bund, 
and permanent protection to every needed industry against for- 
eign encroachment. He had written a work expounding these 
views, while in America, and his ability, in advocating them in the 
public journals of Germany, caused him to be selected as the ex- 
ecutive agent in negotiating such a union. 

Prussia, since 1818, had been vainly endeavoring to draw the 
other German states into a Zollverein. In 1819, Saxe-Weimar 
and Mecklenburg had entered it, and in 1827 Wui'temburg and 
Bavaria made a treaty of commei'ce with it, but would not join it. 
Hanover, Saxony, and Hesse stoutly opposed it, and favored an 
anti-Prussian free trade coalition. Prior to this period the trade 
between Germany and Great Britain had consisted in the export of 
raw wool from Germany and the import of woolen cloths from 
England ; an export of rags and an import of paper ; an import 
of cotton goods and an export of food. Under these industries, 
Germany had been the granary of Europe, but her people so poor 
that throughout the eighteenth century, they were sold by their 
princes to foreign service as mercenary soldiers, and so weak, that 
in 1805 to 1815, it was but sport for France, which had pursued 
protective policies for two centuries, to march her armies through 
Germany, and make it the battle-ground of Europe. 

In 1831, however, Hesse abandoned the free trade coalition and 
joined Prussia, the results of whose steady maintenance of the 
protective policy were beginning to impx^ess the other German 
powers. Several of the smaller states followed in quick succes- 
sion. In 1833, Bavaria, Wurtem burg, and Saxony, did the same. 
In December of that year, the union counted 14,800,000 people. 
In 1834 they had increased to 23,500,000. In 1835, Baden, Nassau, 
and Frankfort joined their number. In the next year the inde- 
fatigable List — through whose labors Germany was thus laying 
the foundation of its present prosperity — was ruined, pecujiiarily, 
by the decline in the value of his extensive mining investment in 
Pennsylvania, in consequence of the adoption of a " free trade " 
tariff by the United States in 1833. This spur did not retard his 
labors. In 1839 the federation extended over 200,000 square miles 
and a population of 27,000,000 of people. In 1852 it had reached 
33,600,000, and now it includes 40,000,000 of people, and from a 
mere customs union has welded the discordant principalities of 
the North German Confederation into the modern Empire of Ger- 
many. It is often claimed, by free traders, that the rates of the 



516 ECONOMIC PH1L080PH7. 

Zollverein were, and that those of the present German empire 
are, low. They have been, and are indeed, lower than the rates 
of most other countries, for the reason that the debt of Prussia was 
at all times nearly nominal, and the present German empire owes 
no debt. Its war with Austria in 1866-7 resulted in the virtual 
annexation of kingdoms and duchies containing 10,000,000 of 
people, without borrowing a dollar, compelling the army it 
defeated, and the provinces it annexed, to pay nearly the whole 
cost of the war, and disbursing the remainder itself out of the 
revenue for the year. 

The similar display of military strategy, and financial power, in 
her war with France, in 1870, resulted in the crowning of the Prus- 
sian king as Emperor of Germany in the French capitol, and the 
payment by France of a penalty of $1, 000, 000, 000 for venturing in- 
to the war. The astuteness of Bismarck, and the iron will of Will- 
iam, could not have been so brilliantly exhibited within the last 
twenty years, but for the unpretentious laboi's of Frederick List 
forty years earlier. 

The supply of capital is so considerable, and the rates of labor 
are so low, in Germany, that the country has marked facilities for 
cheap production. Being wholly without colonies, and never 
having used her armies to extend her trade in foreign countries, 
she has no means of " corralling " foreign trade, so as to compel 
it to pass through her territory, or enrich her people. Her manu- 
facturers and merchants are compelled to obtain all their means 
of profit out of a little country, smaller than Texas, poorer than 
Arizona, by honest, hard, tough toil without a cent of coerced 
trade from any source. This is why both profits and wages are 
lower in Germany, than in England. 

England is an empire of 260,000,000 of people, shaped in a 
pyramid, with 5,000 nobility and gentry at the apex, 980,000 land- 
holders, rural and urban, next to the apex, 10,000,000 of traders, 
bankers and manufacturers next, who, with the landholders, boss 
the empire; 20,000,000 of disinherited laborers who have no stake 
in the country but to pay the taxes on whisky and tobacco and 
do the fighting, and 220,000,000 of Mohammedan, Pagan and 
other Hindoo subjects, who are skinned and peeled through en- 
forced trade, for the benefit of British mills and landlords. Be- 
sides these, through her coerced treaties with Japan and China, 
Turkey and Egypt, and her purchased treaties with Portugal 
prior to the sovereignty of Brazil, England has come into the con- 
trol, not through present cheapness, but through j)ast coercion 



PROTECTING BA W MA TERIAL8. 5 1 7 

and finesse, of the privilege, which in effect is an exclusive one, 
of supplying barbarian goods to about 400,000,000 more. 

The nominal privilege, which other nations have, of sending 
manufactui-ed goods into these countries at the same rate of duties, 
if any, as the English pay, is of the same practical value as the 
theoretical privilege which the whole world has of buying out 
the British nobility, by pajdng more for their estates than they 
are willing to forego to keep them. 

Germany can not, therefore, by any protection she can afford 
to producers in her home markets, attain a rate of profits and 
wages equal to that which the British Empire has attained as 
the result of a perfection in machinery and an accumulation of 
capital which are due to three hundred years of protection to her 
home markets, and two centuries of foreign conquest, whereby 
she has enforced her ascendancy in the trade of 700,000,000 of 
people. No such prize was open to the German people of this 
century. But Prussia, and her associated powers in the Zollverein, 
adjusted the duties with an eye to the development, within the 
Zollverein, of every industry it had the power to foster. Their 
tariff contained hai'dly an ad valorem duty. It laid duties, not 
according to the values of goods, but their kinds. It threw every 
quality of goods, of the same general description, into a single 
class, without regard to their difference of cost, and levied one 
rate of duty upon the Prussian hundredweight, whether the fabric 
were muslin or canvas. This was to ensure that Germans should, 
first of all, be the exclusive producers of those raw materials (if 
they had the natural facilities for producing them) , on whose 
abundance more advanced industries depended. If protection was 
the true road to cheapness it would prove the cheapest route to 
cheap raw materials. It threw together, under a common tariff 
of $36.40 per centner (llOJ lbs.), such diverse objects as hard- 
ware, perfumery, sewing-needles, wigs, clocks, and umbrellas, 
and all admixtures of them. Such a tariff, among demagogues, 
woixld have afforded a specious chance for cheap denunciation, as 
burdening the coarse goods of the poor, and exempting the fine 
goods of the rich, etc. But when these rates were first adjusted, 
in 1820-30, German manufactures were in their infancy, and the 
Germans saw that the coarser the manufactures the moi'e cer- 
tainly the Germans ought to be able to produce them themselves. 
The revolution in the character of German commerce is seen in 
the fact that forty years ago the German expoi'ts were double the 
weight of the imports, though of less value. In 1825 the com- 



518 EOONOMtC PHtLOSOPHT. 

merce down the Elbe was 110,600 tons, while that going upwards 
was only 66,000 tons, Germany being constantly in debt to the 
money-lending powers. In 1868 the exports were but half the 
weight of the imports, though exceeding them in value. In 1850 
the transportation of raw products up the Elbe was 315,000 tons, 
while the return of finished commodities down the Elbe weighed 
only 174,000 tons. Yet so greatly did her exports of commodities 
exceed her imports, in value, that the difference was constantly 
adjusted by an importation of bonds, or liens on the industry of 
other nations, the United States of America being a borrower of 
fully one thousand millions of dollars of German surplus capi- 
tal between 1865 and 1873. Once they were selling raw products 
and cheap labor to the outside world, in exchange for cloths, silks, 
machinery, and finished wares. Now they are selling finished 
commodities, and skilled labor, at high prices, in exchange for the 
raw products of unskilled and agricultural toilers. For in- 
stance, in 1825 Germany exported to England 28,000,000 pounds 
of raw wool, receiving -her pay in English cloth, thus 
showing that wool was cheaper in Germany than in En- 
gland, while cloth was dearer. But in 1851, after twenty 
years of the Zollverein, Germany imported 25,000,000 pounds 
more wool than she exported, and exported 12,000,000 pounds of 
* woolen cloths — proving that woolen cloths had become cheaper, 
and the raw wool dearer, in Germany than in other countries, 
the price of the raw material and the finished article approaching 
each other in consequence of the extensive development of Ger- 
man manufactures. Can it be contended that the Prussian 
farmers, as growers of wool and wearers of cloth, were not en- 
riched by the higher prices they received for their wool, and the 
reduced prices they paid for their cloth ? Or that as tax-payers 
the Germans were not profited by the fact that, while their manu- 
factures were struggling into equality with those of England and 
France, the latter, in large measure, paid the German duties out 
of their own pockets for the privilege of selling their goods in 
German markets, thus relieving the German tax-payer of so much 
of his burden ? That the Germans, as consumers, wei'e enriched is 
shown by the fact that they consume more woolen goods, by 
50,000 pounds annually, than they did under lower duties, and 
when they imported their cloths from England. 

Again, in 1825, Prussia imported only 5,000 cwt. of cotton and 
cotton yarn, and in the twelve years ending in 1836 the amount 
had increased only to 8,000 cwt., or 6,000,000 pounds, which was 



FINER WORK. 519 

about one pound per capita per year for the whole Prussian popu- 
lation. After that period tlie importation into the states of the 
Zollverein of cotton and cotton twist was as follows : In 
1836, 397,233 cwt. ; in 1845, 1,018,150 cwt. ; and in 1851, 1,362,- 
796 cwt. In the last year the export amounted to 159,241 cwt. 
— leaving for domestic consumption more than 1,200,000 cwt., 
or 130,000,000 of pounds, or not less than four pounds per capita 
for the whole population. Says Mr. Carey in his chapter on 
Prussia, in " The Principles of Social Science": " The weight of 
cotton goods exported was less than an eighth of that of the wool 
and yarn imported; and yet the value of that small quantity was 
20,000,000 of thalers— $14,000,000— being almost enough to pay 
for the whole import. At least three-fourths of this large sura 
consisted of labor representing G-erman food, thus readily enabled 
to go to distant countries." In 1826 "Germany supplied the 
world with rags and imported paper, of which her consumption 
was then but small. In 1851 all had changed, the net import 
of the first having been 37,000,000 pounds, the net expoi't 
of the last having risen to 3,500,000. In the first period rags 
were cheaper than in other countries, while paper was dearer. 
In the second rags were dearer, while paper was cheaper. The 
prices of the two had greatly approximated, and, therefore, 
had the consumption of paper so much increased as to absorb 
not only the whole quantity (of rags) produced at home, but 
in addition thereto more than 30,000,000 pounds produced 
abroad. " 

In 1883 * the import of raw cotton had increased to 44,000,000 
pouiids per month, quite four times the importation of 1851 ; the 
exports of cotton cloths were twenty times, in weight and value, 
that of the imports. The imports of lead and copper ore were 
twenty times greater than the exports, but the exports of the 
metals were twenty times greater than the imports. The imports 
of wheat, in 1883, were twelve times greater than the exports, of 
oats six times greater, and of rye and buckwheat sixty times 
greater. Of glass the expoi'ts were sixteen times greater than the 
imports, but of hides and skins the imports were 3^ times greater 
than the exports. Of wood the imports were three times great- 
er than the exports, but of musical instruments the exports were 
thirty- five times greater than the im^Dorts. Of locomotives the 
exports were seventy times in excess of the imports. Of made 

* " U. S, Consular Reports," No. 33, for Aug. 1883, p. 359. 



520 ECONOMIC PHILOSOPHY. 

clothes the exports were seventeen times greater than the imports. 
Of leather and leather goods the imports were but half the weight 
of the exports. Of wine the imports were seven times the ex- 
ports ; but of brandy the exports were 250 times the imports. Of 
flesh the imports were three times the exports, but of starch the 
exports were nearly- six times the imports.- Of molasses the im- 
ports were one-sixth the exports, but of sugar the exports were 91 
times the imports. Of woolen yarn the imj)orts were thi'ee times 
the exports, but of woolen goods the exports were nearly eighteen 
times the imports. Of tar the imports were twice the exports, 
while of pitch the exports were ten times the imports. 

From 1830 to 1854 the quantity of coal mined— a sure test of 
the growth of modern manufactures:— increased from 7,000,000 
tonnes (of 391 lbs. each) to 46,000,000 tonnes. In 1834 Gei^many 
produced 76,000 tons of bar iron; in 1850, 200,000 tons of bar and 
600,000 tons of pig iron. The value of cotton and woolen goods 
exported, rose in 1851 to $25,000,000, the chief pai-t of which con- 
sisted of the food that had been combined with the wool, in the 
process of converting it into cloth. As a consequence, the neces- 
sity for going abroad to find a market for food, had so greatly 
decreased that the net export from the country, that in 1825 was 
the granary of Europe, was but 10,000,000 bushels. Simultane- 
ously with this development of manufactures, and especially of 
cheap iron, Prussia became able to build railroads, until she had 
one mile of road for every five miles of her land, besides loaning 
hundreds of millions of capital to other countries to build roads 
with, or — which is the same thing — buying their stocks when 
built. Travel became so common that but few of the people 
of Prussia failed to visit their chief cities, and thus a higher 
standard of taste in art, architecture, and music was diffused 
over all Germany. A.s the price of the farmers' products in- 
creased, and local markets near at hand sprang up at thousands 
of local centers, the farmers advanced from the early three-field 
system of agriculture, first to improving their land by rotation 
of crops, so as to keep it all in cultivation at once, and then 
to a rotation of manures, the highest development of skill in the 
preservation and improvement of the fertility of the soil. So 
great has the necessity become for a perfect system of tillage, 
to meet the demands of the German consumers, that the pro- 
prietors of land feel that they cannot afford to hold and culti- 
vate it in large quantities, and hence the division of land, among 
a constantly increasing number of proprietors, is going on in Ger- 



GERMAN CULTURE. 521 

many, under protection, from a law of profit as natural as that 
which causes the increasing concentration of the land in England 
into the hands of a few, imder free trade. In Germany the land 
is a means of producing wealth, in accordance with the principles 
of the highest of all arts, that of agriculture. In England it is 
a means, chiefly, of tlie ostentatious display of the fruits of a 
monopoly acquired by crushing out the industries of nations hav- 
ing a weaker military arm, or a purchasable tariff iiolicy. Lands 
which would have been tilled hj English farmers, had they been 
protected in their home market, have been turned into parks, pas- 
tures, and waste, with the profits of a trade in cottons, between 
the cultivators and spinners of Hindostan, the loss of which to 
the Hindoos has been made visible in the periodical famines in 
that country. Thus a grinding spirit marks the success of trade, 
as the spirit of reciprocity characterizes production. 

By means of this minute division of land, in Germany, great 
diversification of employments, steady increase in wealth by pro- 
duction rather than by trade, a competency is brought within the 
reach of every German. The government has wisely cared for 
the education of the people as well as their productive industries. 
As a consequence, there is a strong, active, intelligent love of 
fatherland, an intelligence in the German armies which fulfills the 
adage that " bayonets think," and a capacity on the part of the peo- 
ple during war or peace to do any thing that man can do, and do it 
well. German literature and art are rapidly taking the lead in 
the world of ideas, as Prussian arms and diplomacy are in that of 
politics and nations. In theology, history, poetry, science, art, in 
universities and galleries, in books and paintings, in the stage and 
the church, Germany has achieved her greatest strides within 
the last half century. Nearly all of this accession of power in 
Germany is due immediately to the adoiition in 1820 to 1834 of a 
protective policy. Without this she might have been industrious, 
but she would have been disorganized, poor, and a borrower. With 
it she has become united, powerful, and rich, indeed the strong- 
est power in Europe. This period has placed her in the lead in 
learning, art, diplomacy, science, and war, as distinctly as the 
United States of America have within thirty years past taken and 
held the lead in political freedom, material and inventive energy, 
and the production of wealtli. 

193. Germany's Pre.seiit System of Taxation. — The Ger- 
man Empire of 1786 included 289 states, among which were sixty- 
one free cities. In 1812 the Confederacy of the Rhine comprised 



522 ECONOMIC PHILOSOPHY. 

about half the G-erman Empire, the other half being parcelled out 
between France, Italy, Austria, Prussia, and the Danish States, 
The German Confederacy of 1815-66 was formed with the Austrian 
Confederate States, the Prussian Confederate States, the Bavarian 
Kingdom, and Hanover as its leading powers, each of which were 
agglomerations, and twenty-nine other states, most of which were 
in part agglomerated states, containing in all 243, 556 square miles 
and, in 1815, 51,300,000 population, and in 1865, 73,410,767 popu- 
lation. As the issue of the war of 1866, Austria withdrew from 
Germany, and, at the close of the campaign of 1870 against 
France, Germany underwent an internal change resulting in the 
constitution of 16th April, 1871, of the present empire. Into this 
empire are merged by force of conquest twenty-six sovereignties.* 
The laws relating to customs and commerce are wholly under 
control of the empire. Notwithstanding the large standing army 
the annual expenses of the government are small compared with 
those of England, France, or the United States, being only a 
third or fourth of either. The entire revenue for 1877-8 was only 
£25,530,403, of which taxes and duties, on provisions, were £12, 
652,690. Extraordinary revenue was £5,157,397, matricular con- 
tributions were £4,052,208, and the rest were minor taxes. This 
leaves to the several states of the empire their land tax, house 
tax, income tax, class tax, tax on trades, railway duty, and other 
direct taxes f — the total estimated revenue and expenditure of 
Prussia alone being £35,125,034, or considerably greater than that 
of the empire, of which it is the chief part. The class tax is vir- 
tually an income tax on all persons, subject to certain exceptions, 
who receive more than 420 mai'ks and less than 3,000 marks, 
while the term income tax is reserved for the tax on incomes ex- 
ceeding 3,000 marks, derived from either real estate, capital, or 
any trade, busiiiess, or paying profession. The trade tax is lev- 
ied on commei'ce, hotels, restaurants, and innkeepers, manufac- 
tures and trades employing a number of persons, mills, naviga- 
tion, warehouses, livery stables, and peddlers. The table (in mil- 

* Prussia, Lunenburg, Bavaria, Saxony, Wurtemberg, Baden, Hesse, Meckleuburg- 
Schwerin, Saxe- Weimar, Mecklenburg-Strelitz, Oldenburg, Brunswick, Saxe-Meiningen, 
Saxe-AItenburg, Saxe-Coburg-Gotha, Anhalt, Schwarzburg Rudolphstadt, Schwarz- 
burg Sonderhausen, Waldeck Reuss, Schomburg Lippe, Lippe, Lubeck, Bremen, Ham- 
burg, Alsace-Lorraine. Area, 210,493 English square miles ; population in 1877, 
43,727,360. 

t For a minute analysis of German taxes, imperial and Prussian, see U. S. Consular 
Reports, No. 32, August, 1883, pp. 395-405. 



ADVANCING WAGES. 



523 



lions and tenths of millions) shows the relative productiveness of 
these taxes, in Prussia, in 1876, in marks (23.8 cents). 





Ui 










Communal Taxes, 1876. 








00 






jjj 


a 
.2 

"3 
a 
o 

Ph 




C3 

■*^ 

a) 

a 

o 

a 

h-l 


w 

C M 

■ 03 a 

a 

3 

o 


13 

si 


3 

o 
Eh 


i 

Ph 


i 

58.0 




li 


1.8 


03 

0.3 
0-2 


5 





25.6 


39.7 


29.0 


55.7 


17.1 


141.6 


70.0 


31.7 


161.5 


73.9 



From this it appears that nearly one-third of Prussian state and 
local (communal) taxation is expended upon public schools. The 
cities of Hamburg- and Bremen remain at present, by stipulation, 
free from the customs-imposts of the empire, an exception which 
will expire in a few years. Bavaria, Wurtemberg, and Baden 
also retain their taxes on beer, while the like taxes in the other 
states go into the imperial treasury.* 

The German system, of adjusting duties largely by weight, ren- 
ders it difficult to translate their tariff terms into ours, but all 
who investigate their system see in it a very determined effort to 
protect all German industries. 

After the enactment of the new duties in 1879, designed to give 
a more emphatic j)rotection to the iron and steel manufacture, 
the German Steel and Iron Industry Association published statis- 
tics received from 320 iron works, foundries, and machine works 
in various parts of Germany, showing that in January, 1879, just 
before the enactment, they had employed in these works 151,582 
Avorkmen, whose monthly wages were $2,280,375, while in Janu- 
aiy, 1884, the same works employed 202,888 workmen, to whom 
they paid $3,468,024 wages per month. The number of workmen 
had increased by 33.2 per cent., and the aggregate of wages by 
52.1 per cent, per month. The average I'ate of wage per month 
on all the workmen had risen from $15.04 in the first period to 
$17. 17 in the second, being $2. 13 per month in favor of the laborer. 
From 1879 to 1882 the number of workmen employed in the 
machine works increased by 29.3 per cent. , from 1879 to 1883 by 
50.9 per cent., and from 1879 to 1884 by 52.9 per cent.f 



* U. S. Consular Report?, No. 51, March, 1885. 

t Consul Warner (Consular Keports, No. ii, June, 1881, p. 15) adds : " This gives aa 



524 ECONOMIC PHILOSOPHY. 

While every thing has been done, that wise and economic gov- 
ernment could do, to enhance the growth of the German people in 
wealth, yet in their competitions with other nations they work 
against many relatively greater advantages in their competitors, 
which no wisdom could overcome. Their country is not naturally 
a garden in fertility, but on the whole its soil is in the main nig- 
gardly, and much of it sterile or inferior as well as mountainous. 
Their area, like that of France or Austro-Hungary, is less than that 
of Texas. Their people lip.ve strong disuniting and disintegrating 
tendencies which have torn them into petty fragmentary states 
for centuries, and rendered great political courage, and an iron 
will on the part of William and Bismarck, necessary to weld their 
incongruous parts into one coherent state. Frequently, until 
1866, these great chiefs found their plans thwarted by a Eeichstag, 
or Parliament, detei'mined to prevent their consummation, and as 
often these two men defied the action of the Parliament and over- 
ruled its non-concurrence. In 1866 Parliament passed an Act of 
Indemnity in favor of the government, owing to the conviction 
of the people that William and Bismarck, in maintaining the 
high efficiency of the army, had been wiser than the representa- 
tives of the people. Certainly, had Parliament had its way, the 
successes of the German state, in its wars with Austria and France, 
would have been less brilliant and the war might have proved dis- 
astrous, in which case the North German Confederation would still 
have been the second-rate power which it was on the accession 
of William to the crown of Prussia. 

Meanwhile, however, the German people have led their bril- 
liant career only through universal toil and sacrifice. The labor 
conditions are such that the women bear actually more than half 
the burdens of the several occupations. In a portion of the Wur- 
temberg Consulate, containing 100,369 males and 106,042 females, 
for each woman who supports herself in civil, church, or profes- 
sional services (deemed genteel), there are five and a fraction who 

increaBe of the single wages from 1879 to 1882, 14.6 per cent. ; from 1879 to 1883, 15 per 
cent., and from 1879 to 1884, 19 2 per cent. Since 1879, the number of men employed in 
the iron works increased by 22.3 per cent., the total wages by 41.4 per cent., the single 
wages by 11.8 per cent. 

" In comparison to those figures of 1879 there has also been an extraordinary large in- 
crease of labor and wages in the iron works. Since then the number of workmen has 
increased by 26,3 per cent., the total wages advanced by 41.8 per cent., and the single 
wages by 11.8 per cent. ; which, too, had taken place at a period when many works in 
Eni^land — and some in France and Beleium — had to suspend operations and thousands 
of workmen were thrown out of employment, with considerable reduction of wages,'' 



WOMAN LABOR. 525 

live by trade and commerce, iiiiie and a fraction by housework, 
twenty-four and a fraction by mining, foundi'y and building 
work, and sixty-three and a fraction by agriculture, cattle rais- 
ing, forestry, and fishing. 

Comparing Germany and the United States, the standuig army 
of men withdrawn from industry in Germany, as soldiers, is but 
little more than one per cent, of the population, while in America 
the standing army of women, withdrawn from productive indus- 
try to live in ladyhood, is abovit twenty-five per cent, of the pop- 
ulation, since only one American woman in ten is engaged in in- 
dustrial occupations. 

In the district above referred to, in Germany, 160 women work 
in quarries, 71 make knives, 1 makes mathematical instruments 
one is a chemist, 44 make explosives, 1907 are paper makers, 15 
are tanners, 54 are bookbinders and boxmakers, 2 are coopers, 
355 are turners, 753 sew, 3 are notary's clerks, 76 are teachers, 67 
are authoi'S and writers, and 16,109 make their personal living by 
toil at agriculture, cattle raising, forestry, hunting, and fishing. 

In agricultural pursuits, to 32,714 male toilers there are 39,218 
female toilers. The women plant, sow, and prepare the soil. 
They hold the plow, which is generally drawn by a pair of cows, 
as oxen are too expensive and yield too little return. Many of 
them carry the manure into the fields in baskets strapped to their 
backs. They do most of the haying and harvesting, and thresh 
much of the grain with the old-fashioned hand-flail. They go 
with the coal carts, and shovel the coal into the cellars, while the 
male drives and rides. They draw the milk into town in a hand- 
cart — a woman and a dog generally making the team.* Uncon- 
quered by these difficulties, the German peasant works with the 
same plodding industry and assiduity as has given fame to the 
German scholars, musicians, and soldiers, and a foremost position 
among nations to the German people. 

194. Revenue System of Russia. — Russia is painted in 
such opposite colors by opposing theorists, and stands in such 
sti'ong contrast to Western Europe, and especially to America, 
that it will be difficiilt to present a picture of her economic system 
that will be accepted as accurate by those who have drawn their 
views of Russia from unlike sources of information. In her gov- 
ernment and social economy, Russia combines all the absolutism 
which western nations pride themselves in having cast off, with 

* U, S, Consular Reports, " Labor in Europe " Report, p . 29, 



526 ECONOMIC PHILOSOPHY. 

a degree of socialism and communism in which the land and 
labor reformers of England and America ought to be able to see 
the perfect realization of all to which their theories aspire. Russia 
spans one-sixth of the land surface on the planet. That system of 
communal ownership of land, which has given place to individual 
ownership in Western Europe, still prevails in Russia.* In the 
Mir or rural commune, every male is, from birth, an owner of a 
share in the land of his commune. This share is inalienable for 
debt, crime, or even absence, for though he go to a distant part of 
the empire, or into trade, the Mir assumes that he will return. 
His land is tilled on his account, but at his expense, in his ab- 
sence, and awaits him like a vacant chair at the home fireside. 
The government of the Mir is like that of a family. No one out- 
side is expected to interfere. It is democratic, and is carried on 
more like a family than a township, and more by talking than by 
voting. It has one nominal chief or ruler, but every one has his 
say. In the towns the Artel unites the artisans into a commune, 
as the Mir unites the agriculturists. No Russian subject is the 
exclusive owner of his own time or services. They belong to the 
commune. On the other hand, no one is turned out to beg or die 
as a pauper, with no refuge but the workhouse and no guardian 
but the state. The commune employs all burghers and peasants, 
whether farmers or artisans, apportions the means of support to 
all, pays their debts and taxes, punishes their delinquencies, and 
usually makes their contracts. The lands are tilled under the 
three-field system, in the working of which one-third of the land 
is always fallow. Above the burgher, or peasant class, the mer- 
chants form a sort of stratum or grade. Then come a class made 
up of functionaries, ofiicials, artists, and clergy — the professions. 
Above these are the nobility, whose rank is not always dignified 
by wealth. 

V/hile the form of government is extremely autocratic, the 
working of it is sometimes the reverse. Thus, in effecting the 
emancipation of the serfs, above a million and a half of pei-sons 
were reached and advised with, in person, by the various commit- 
tees, national, provincial, and local, in the interval in which the 
matter was under consideration, viz., from 1856 to 1863. As the re- 
sult of this wide consultation of interests, and of the appointment 
of arbitrators innumerable, to arrange the allotments of land to the 
serfs, and other details, the emancipation of 23,000,000 serfs was 



* W. Hepworth Dixon, " Free Russia," p. 154. 



TAXES ON Liq UOR. 527 

effected without loss of )ife, or expenditure of money, such as civil 
wai' would have produced. Every freed serf became a land-owner. 

One of the most potent agencies, in paving the way for emanci- 
pation, had been the employment of many of the serfs in manu- 
factures, which had itself been due to the persistent protection of 
Russian markets to Russian producers, which has been maintained 
from the reign of Peter the Great to the present time. 

The customs duties are intended, in many instances, to prohibit 
importation rather than to obtain revenue. The area of Russia is 
so diversified, and the wants of the mass of the people so simple, 
that the need of heavy importations is not felt. Hence out of a 
total revenue of £93,076,518 in 1877, only £9,106,700 were obtained 
by duties on imports. The chief sources of revenue are the poll 
and personal taxes, the excise on liquors, salt, tobacco, and beet 
sugar, customs duties, crown revenues, and sales of lands. Rus- 
sia had, in 1879, 27,927 factories, employing' 685,245 hands, being- 
only about one-fourth the number employed in manufactures in 
the United States. There is an enormous home flax, linen, woolen, 
hemp, and cotton spinning industry, which does not appear in 
these statistics, but which in hemp, linen, flax, and woolen is esti- 
mated to exceed in its product that of the factories. 

Russia is as remarkable for its excessive employment of children 
as Germany is for its extensive employment of women. Over 
60,000 children labor in the Russian factories. The singular plea 
is made for their emplojaiient, that their labor is worth more than 
that of adults, as the latter are so often impaired in their value as 
workers by drink, while the children have not learned the use of 
liquors. One of the lessons taught by the Russian tax system is 
the tendency which raising a revenue by taxes on liquors has, to 
create a sort of partnership between the government and the pro- 
ducers of liquors. The Czar Nicholas in particular, but his succes- 
sors also, on several occasions have declared the temperance move- 
ment illegal, and the temperance unions and pledges mischiev- 
ous, because of the tendency, which discontinuance in the use of 
liquors would have, to diminish the revenue. Those who are most 
familiar with the practical workings of the internal revenue sys- 
tem in the United States, perceive a similar tendency toward a 
partnership between the liquor producing interest and the poli- 
ticians in power, though it manifests itself in a different way. 
Here, the higher the tax the larger the capital required to carry 
the stocks, and the greater the tendency to concentrate the busi- 
ness into a few^ hands. These few regard the internal revenue tax 



528 ECONOMIG PHILOSOPHY. 

on their product, as the fence which surrounds their monopoly, 
and protects their profits. At the same time they obtain such 
legislation from Congress as virtually defers the payment of the 
tax, in many cases, until sales ar-e made. For these important ad- 
vantages they can well afford to become the largest contributors 
toward the cost of running those primaiy conventions in which 
candidates for office are selected. Tliese primary conventions for 
selecting the candidates determine the personnel of the govern- 
ment to be chosen, as the same class of men, and very often the 
same meii, control the conventions of both parties, and also of 
those minor third and fourth parties formed to defeat one or the 
other of the two main parties by drawing off a portion of its usual 
voters. In this manner the producers of liquors have their polit- 
ical influence and power greatly magnified, by the tax which is 
supposed to rest on them as a heavy burden, a soi-t of punishment 
for their calling, and a necessary aid to the principles of those 
who seek to suppress wholly the sale of spirituous liquors. 

The practical socialism, which underlies the Russian system of 
land cultivation and manufacturing industry, extends to Russian 
imperial finance. The imperial government, for eighty years, has 
been in a close partnership with all the banking and money-lending 
agencies of the empire. The paper money, which has been issued 
in large quantities in Russia, since 1800, has been issued jomtly by 
the government and the banks, and when redemption or retire- 
ment of any portion of the paper money has been attempted, the 
government and the banks have co-operated like parts of one 
mechanism. In 1840, after the Russian paper money, or bills of 
credit of the empire, had been at a discount since 1815, whereby 
three and a half roubles in pa^i^r would only purchase one rouble 
in silver, the government, by joint action with the banks, retired 
the depreciated currency a\; its actual value and issued a new one 
at par with silver, at the same time permitting all private con- 
tracts incurred in the depreciated currency to be paid in that cur- 
rency, and making only new contracts payable in the new 
currency.* At a time when there were 595,776,000 paper 
roubles in circulation, their volume was reduced, by their re- 
tirement and the I'e-issue in their stead of a new currency 
redeemable on demand in silver, to 170,221,715 roubles. Redemp- 

* La Revue des Deux Mondes, January and March, 1864 : articles on Finances of 
Kassia, by M. L. Wolowski. HimVs Merchant's Magazine, vol. 30, p. 735 ; vol. 31, p. 
226. " Russia," by Karamsin, Tooke and Segun, edited by Kelley, 1855, vol. 2, p. 460. 
" Modern Russia," by J. Eckbaidt, p. 124. 



PRACTICAL SOCIALISM. 529 

tion in silver, on the new paper money so issued, was maintained 
until the outbreak of the Crimean war in 1851, when further 
issues of paper money placed the precious metals again at a pre- 
mium. An effort was again made, in 1862-3, to redeem the paper 
money, merely by borrowing a large sum in coin and paying it 
out in redemption of the pape/.', in the vain hope that holders of 
government notes would have their confidence in the notes so re- 
stored that they would cease calling for the coin before the gov- 
ernment's stock of coin ran out. In this the government was 
mistaken, and the scheme failed.* In 1865-70 Mr. Horace Gree- 
ley proposed, in the Tribune^ for the United States government, 
upon its "greenback" notes, the same scheme of redemption at. 
tempted in Eussia in 1863. It was for a time famous for the 
apothegm, " The road to resumption is to resume." 

It is a noteworthy fact that while Russia is spoken of by En- 
glish and German critics as having passed through "national 
bankruptcy," by this act of "scaling her currency," it reduced a 
redundant and depreciated paper currency to one-fourth its pre- 
vious volume without occasioning a single bankruptcy among the 
Russian people, whereas the policy pursued in the United States 
in 1865 to 1879, of forcing a depreciated currency gradually up to 
par, by rapid extmguishment of the debt of which it formed the 
most useful part, involved a period of individual stringency from 
1873 to 1878 of five years' duration, and extending to millions of 
persons. There is, therefore, in autocratic Russia a closer and 
more socialistic solidarity between government and people, in two 
aspects, than is met with in western nations. The imperial gov- 
ernment is more socialist as respects the banks and money. The 
communal system is more socialist as respects land and industry. 
The various ranks of society are within themselves more socialis- 
tic, since they have much to do with distributing the taxes which 
fall upon their own order. Out of this degree of socialistic soli- 
darity grow three important sources of exemption from taxation. 
The Russians have not been taxed, as the Americans were, in the 
sum of ten thousand millions of dollars, to eflFect emancipation, 
nor in long periods of individual bankrui)tcy, to effect resump- 
tion. They escape, by their communal system, the heavy taxation 
which the English undergo to provide for paupers. They secure 
unity and nationality^ between races the most diverse, without 
civil insurrection or intestine war. The czar is trying to induce 

* " Condition of Nations," by Kolb and Streeter; article on Russia. 



530 ECONOMIC PHILOSOPHY. 

the people to take on themselves the burden of local self -govern- 
ment, but they seem reluctant to do so. The empire is divided 
into fifty provinces, each of which is invited by the imperial gov- 
ernm.ent to elect a zemstvo, or local legislature, to provide in a 
manner somewhat like the English local boards, or our Ameri- 
can county boards of supervisors, for matters of education, roads, 
bridges, and all local interests. The local experiment, seerhs to 
have no vitality. Members-elect have to be fined to secure their 
attendance. The elements of the government which are vital 
are the commune, the empire, the army, the church, and the 
banks, or money-lenders. The nihilist faction does not represent 
poverty, like the anti-landlord party in Ireland. It consists 
chiefly of gentlemen and educated men, who hang on at the 
universities, and fail to find an active career for themselves in the 
army or the empire. Men whose lives ai'e spent in study, with- 
out useful action, become cynical and assail society and the ex- 
isting, with equal rancor, whether they dwell in democratic repub- 
lics or under the black eagles of Russian czardom. 

195. English Colonies. — The greater the number of tariffs 
and revenue systems we examine, the stronger becomes our per- 
ception of their average uniformity. Austria-Hungary, Italy, 
Servia, Roumania, and Spain in Europe, and on the western con- 
tinent Mexico, Brazil, Chili, Buenos Ayres, and Colombia, and 
the various colonies of England, have revenue systems essentially 
like those of France, Germany, and Russia. All mingle direct 
with indirect taxes ; all, or nearly all, bring some taxes to bear 
on certain salient taxable objects, such as pei'sons (poll or capita- 
tion taxes) lands and houses, or fixed capital, conveyances, 
descents of property, imports or exports, or both, salt, liquors, 
wines, opium, tobacco, and beer. 

It is sometimes alleged that, of the English colonies in Australia, 
Victoria and all the others are protective, but New South Wales is 
strongly for free trade. It may be hazardous to impeach, at a 
distance, a local opinion of this sort, and it is certain that the 
Victorian tariff includes duties calculated to protect certain 
branches of production, such as glassware, carriage materials, 
upholstery and furniture, musical instruments, wheat, and oats, 
grates, stoves, watches, etc., which are free of duty in New South 
Wales. But it is equally true that New South Wales protects the 
manufacture of galvanized iron, while Victoria admits it free, and 
protects also the manufacture of paper. Indeed, most of the 
duties levied under both tariffs are protective in some degree, 



THE NATIONAL POLICY. 531 

and tliey are about seventy in number in New South Wales and 
about three hundred and thirty in Victoria. All the larger colo- 
nies of England except India, including Australia, New Zealand, 
Canada, and Tasmania, are permitted to, and do in fact protect their 
domestic industries against such of England's products as they 
think may subvert their own, and the same duties are paid, in them, 
on imports from England as on those coming from other countries. 

In Canada, the protective policy, called there the national 
policy, was adopted by the election of the government of Sir John 
A, Macdonald, and has since been pursued. It has been coupled 
with a policy of costly internal improvements, such as the Cana- 
dian Pacific Railroad, and of important public works, with sub- 
ventions and loans. Doubtless all these policies will stand or 
fall together, though the principles they involve, while affiliated, 
are not identical. The cotton, woolen, iron and steel, leather and 
wooden-ware manufactures have, since 1879, sprung forward into 
greater prominence than previously, and the prevailing party 
continues to hold that the protective policy has given more com- 
modities for consumption, and better wages to labor. 

The national policy in Canada, however, seems to include a 
sentiment in favor of aggregating the various provinces of the 
Dominion into a condition of stronger defensive unity against 
the United States, i.e., of converting Canada into a military 
power capable of resisting the United States in the event of war. 
So many influences, tending toward expense, may make the drain 
upon Canadian resources a serious set off to the advantages ob- 
tained from the protective policy, which, in themselves, are clear 
and strong, but can not stand too much handicapping. 

The peculiarity which is most striking, in the position of Can- 
ada, is that her juxtaposition to the United States has had great 
influence in causiug England to withdraw from the attempt to 
govern her in fact, or to do any thing in the smallest degree dis- 
agreeable to the Canadian people. The possibility of the mother 
country pursuing such a policy is tacitly regarded, by the states- 
men of both countries, as tending to provoke Canada to annex- 
ation to the United States. In this way the United States be- 
comes the passive, but potential, author of Canadian liberty. As 
England can not, with dignity, pursue unlike courses toward colo- 
nies so much alike, in every other respect than that of their near- 
ness to the United States, as are the Australasian and Cape colo- 
nies, the United States becomes the tacit emancipator of the entire 
chain of British colonies. 



532 ECONOMIC PHILOSOPHY. 

Until 1866, the great republic performed this good office for 
her neighbor involuntarily and without return. Canada had 
nearly as free access to all American markets as the American 
people. On the termination of the reciprocity treaty of 1854 
with Canada, in 1866, the United States, having a large national 
debt to provide for, raised the duties on Canadian products in 
accordance with her own interests. In lumber, coal, fish, barley, 
potatoes, wheat, rye, hops, eggs, live stock, horses, meats, etc., 
Canadians were not likely to obtain any other or higher price for 
their product, in the United States, after a duty was imposed, than 
they would have obtained before and without it. All these pro- 
ducts had a standard price, gauged according to the ratio of the 
whole supply to the whole demand, and since all these were arti- 
cles of export from the States, the import from Canada was no 
part of the efficient supply whatever. It was simply a supereroga- 
tion, like an additional stream of water brought into a fountain 
which is already running over. It determined neither the level 
nor the quantity. So these Canadian products neither added to 
the American supply, nor lowered the American price. They only 
pushed out the quantity of the American commodity which they 
displaced, into an export, or caused a cessation in its production, 
at a somewhat more easterly point on our frontier of cultivation 
than the production would otherwise have reached, one or the 
other. 

For instance, of lumber the United States, as a whole, are ex- 
porters, i.e.^ the price of lumber along the Atlantic coast is such 
that every year about $28,000,000 worth of lumber must be sent 
to Europe and elsewhere. This indicates an average American 
price, on the seaboard, lower than in Europe. But Canada also 
sends about the same quantity of lumber abroad as the United 
States, thus showing that the two countries are ready to take the 
European price in preference to their home price for about $27,- 
000,000 worth of lumber, which to the Canadians is two-thirds of 
their market and to the Americans is one-fifteenth or one-twenti- 
eth of their market. The American price being thus determined 
by their own supply, if Canadians are taxed a small percentage 
of the value of the lumber, on the privilege of bringing it into the 
American market, the tax becomes an addition to the Canadian 
cost of production, no different, in its incidence, from what it 
would be if it were an increase in cost of transporting or chopping 
it, or a royalty on the stump. The Canadian producer, if he pays 
it, suffers a deduction from his profits, but can not charge itovez'. 



TAXING THE CANADIANS. 533 

As a deduction from liis profits, it may have one or several of 
these effects. It may depress tlie price of lumber in Canada, and 
will in those portions of Canada which are so near the American 
market as to leave the pi'ofit of selling in the American market, 
after paying the duty, greater than the profit of sending the lum- 
ber across the ocean. It may discourage the production (bring- 
ing forward) of certain portions of lumber, from Canada, for the 
American market'. It may leave certain Canadian producers 
selling at two prices, one a Canadian price, high enough to reim- 
burse them for the burden they are under in paying duties on the 
portion they sell to American purchasers, and the other au. 
American price low enough, so that, with duty added, it just 
reaches the average American piice. 

The conditions thus traced out, as to lumber, apply with equal 
force to the importation of coal, barley, wheat, hops, eggs, rye, 
and most farm and forest products, from Canada iuto the United 
States. Out of all these, the United States collects a revenue of 
about four to six millions of dollars, and I can not resist the con- 
viction that this revenue can not be charged over, by those who 
pay it, to American consumers of these products. It seems to be 
a tax levied by the United States on Canadian industries, and is 
nearly equal in amount to the revenue paid by Canadians toward 
the suppoi't of their own government. ' 

196. China and Japan. — While England reluctantly per- 
mits Canada and Australia to protect their manufactures against 
her own competition in any degree they think proper, she vetoed 
in 1878 an attempt to do this in India, and holds China and 
Japan resolutely fast under treaty obligations which were forced 
upon them by war, and which are much lower and less protective 
to both those countries than their govemiments, if relieved of all 
terror of military coercion, would be glad to enact.* England, 
that dare not lay a tax, for her own benefit, in Canada or Australia, 
or plant a gun or land a regiment to prevent either of those colo- 
nies from shutting out her manufactures by protective or prohib- 
itory tariffs, though they are called subject provinces, has no hes- 
itation in dictating to the populous and so-called independent em- 
pires of China and Japan what imports they shall admit, and at 
what rate of duty, and in forcing China by war to admit as an 

* Richard Cobdeii, speaking In Parliament on February 26, 1857 (see Speeches of Cob- 
den, by Bright, p. .?82, " China War "), said : " I only wish that we had not five ports, 
but one port, in France, Austria, or Paissia, where we should have the same low tariff 
as we now have in China." 



534 EOONOMIG PHILOSOPHY. 

import the detested opium of India, wliicli tlie Chinese govern- 
ment sought to exclude. 

Every other feature of the Chinese Empire has been tlie sub- 
ject of interested inaccuracy and mercenary misrepresentation, 
except the fact which, to an aggressive foe, is fundamental, that 
its people are incapable of opposing to foreign invasion a military 
resistance proportionate to their numbers. In 1839 to 1840 Great 
Britain declared war upon China, because of the carrying out, by 
the Chinese, of an agreement for the destruction of all the opium 
held by British mex'chants in China, which treaty had been 
solemnly proposed and made by Great Britain's own representa- 
tive or superintendent of trade, Captain Elliott.* 

The world has been made currently to believe that the English 
rendered a public service to mankind " in opening the Chinese 
ports " in 1840, to commerce, thus overcoming an anterior per- 
petually exclusive policy, V4^hich had been native and national on 
the part of the Chinese from time immemorial. Irt fact, the 
policy of exclusion had been recently adopted by the Chinese 
only as a police regulation to prevent the introduction of opium, 



* The story of this infamy is thus briefly told by the " Encyclopaedia Britannica," Art. 
China : ," The chief cause of complaint adduced by the mandarins was the introduc- 
tion of opium by the merchants, and for years they attempted by every means in their 
power, by stopping all foreign trade, bv demands for the prohibition of the traflic in 
the drug, and by vigilant preventive measures to put a stop to its importation. At 
length Captain Elliott, the superintendent of trade, in 1839, agreed that all the opium in 
the hands of Englishmen should be given up to the native authorities, and he exacted a 
pledge from the merchants that they would no longer deal in the drug. On April 3, 
20,283 chests of opium were handed over to the mandarins and were by them destroyed 
^a sufficient proof that they were in earnest in their endeavors to suppress the traffic- 
This demand of Commissioner Lin was considered by the English government to 
amount to a casus belli^ and in 1840 war was declared. In the same year the fleet cap- 
tured Chuson, and in the following year the Bogue forts fell, in consequence of which 
operations tlie Chinese agreed to cede Hong Kong to the victors and to pay an indem- 
nity of $6,000,000. As soon as this news reached Pekin, Ke Shen, who had suc- 
ceeded Commissioner Lin, was dismissed from his post and degraded, and Yi Shon. 
another Tatar, was appointed in his room. But before the new commissioner reached 
his post, Canton had fallen into the hands of Sir Hugh Gough, and shortly afterward 
Amoy, Ningpo, Tinghai in Chusan Chapoo, Shanghai, and Chin Keang Foo shared the 
same fate, and a like evil would have happened to Nanking had not the imperial gov- 
ernment, dreading the loss of the " Southern Capital," proposed terms of peace. After 
much discussion, Sir Henry Pottinger, who had succeeded Captain Elliott, concluded, in , 
1842, a treaty with the imperial commissioners by which the four additional ports of 
Amoy, Fuh Chow Foo, Ningpo, and Shangliai, were declared open to foreign trade and 
an indemnity of $21,000,000 was to be paid to the English." 

In 1858 to 1870 another war for indemnity was begun by the English, in which the 
French assisted, and the allied forces, under Lord Elgin and Sir Hope Grant, marched to 
Pekin and obtained a " war indemnity " of 8,000,000 taels. 



CHINA SEEKING PROTECTION. 535 

and because such had been the violation of their pledges on the 
part of the English, that it had been found impossible to shut out 
opium without prohibitmg foreign commerce altogether. Thus 
the English are able to paint, as barbarism, a desire for exclusion 
which they themselves produce ; to herald as a boon to civiliza- 
tion, the opening of Chinese ports to opium alone, since apart 
from the opium evil there had been no desire to close them ; to 
exact a money indemnity for the cost of killing off the Chinese, 
for the crime of assuming that a treaty of cessation of the opium 
traffic, authorizing the destruction of opium, which had been 
solemnly ratified by G-reat Britain herself, entitled China to the 
rights it guaranteed, and meant what it said ; and finally, to brand 
as a nation of liars, a race toward whom the British kingdom 
has never put itself on record except by acts of monumental per- 
fidy. 

In 1860 the Hon. Anson Burlingame was appointed by the 
United States as minister to China, and continued for years to 
perform his functions toward that government in a manner that 
won for him the marked trust and affection of the Chinese gov- 
ernment. When the pei'iod for his return to the United States 
arrived, the Chinese government requested him to accept the 
post of Minister Plenipotentiary for that government to all the 
western powers, which he did. In this, and antecedent, and many 
subsequent acts on the part of the Chinese government, it has 
manifested a strong desire to bring itself into closer relations 
with a government with which friendship would not mean sub- 
jugation. 

The early death of Mr. Burlingame cut short the hopes which 
the Chinese government, or nation, may have based on his talents 
and energy, of being permitted to stand toward western treaty- 
making powers as an equal. To their simple minds it was a mys- 
tery that the act of a British envoy and agent authorizing a 
destruction of opium, and consenting to the suppression of a bane- 
ful traffic, should be a cause of war on the part of his own govern- 
ment against the government which assumed that a British bar- 
gain meant what it said. The well-known purpose of the Chi- 
nese government, in employing Mr. Burlingame upon his diplo- 
matic mission, was not so much to obtain new treaties, as to make 
it possible that treaties of any kind, in behalf of China, should 
have the weight of a moral obligation on western nations. A 
rectification of international ethics might bring the western na- 
tions, or at least the United States, into a position of intimacy, 



536 BGONOMIG PHILOSOPHY. 

confidence, and trust, which, however valuable it might prove to 
be, but little has yet been done to deserve. While the conquest 
of China by England is no longer expected to follow that of 
India,* the entire trade of China is held, as in a vise, by English 
merchants, by and through the treaties obtained by past coercion, 
and the readiness to renew that coercion when necessary, f Amer- 
ica and all other countries, though nominally entitled to admit their 
products into China at equal rates of duty, are virtually shut out 
of the trade with China through the indirect effects of the state 
of armed precedence and quasi-subjugation effected by the En- 
glish. The way to stop the tendency of Chinamen to leave China, 
and flood the United States, is to restore to them the absolute 
autonomy of their own country. If Great Britain shall be per- 
mitted to continue her present degree of precedence in the trade 
with the Chinese, her system of taxing that empire through the 
profits of enforced trade and the subversion of Chinese manufac- 
tures needs only the aid of railroads and banks throughout the 
empire to make it as complete a success as in India. In that case it 
will as completely destroy the Chinese system of industry as it 
has that in Hindostan. An enormous exodus, and deportation of 
the Chinese, would follow, to the American continent, as well as 
decimating famines and pestilences in China itself. America is 
the chief silver-producing country of the world, China the 
largest silver-consuming country. In America, silver bullion 
is worth only one-twentieth its weight in gold. In China, 
it is worth two-twentieths. Yet such is the grip of England, on 
the trade of the Chinese, that America pays for her imports from. 
China in the dearer metal, and begs her small quota of trade as a 
crumb from the English table. 

Most western misinformation concerning China has been ob- 
tained, either through commercial smugglers intent on violating 
her laws, temporary ambassadors appointed to convert this clan- 
destine intrusion into direct conquest, or Christian missionaries 

* Cobden, in " Speech on Chinese War," says : " I am not sure that America would 
acquiesce in your making an India of China. Does any body who knows any thing of 
China believe that you could annex it ? It is an empire of 300,000,000 people. How 
are you to govern them ? " etc. 

t In the speech above quoted of Cobden on the China war, he said : " There are a great 
many merchants in China who are engaged in a traffic of a very exceptional character 
which is detrimental not merely to the health but to the morals, to the souls and bodies 
of the Chinese. . . . And I doubt whether it is always for their benefit as merchants 
that they are placed in a position which enables them to summon to their aid an over- 
whelming force, to compel the authorities to yield to their demands," 



CHINESE REVENUES. 537 

whose pious zeal would naturally magnify those qualities of the 
Chinese character which place in tlie strongest light the apparent 
need of missionary efforts for their conversion. On the other 
hand the Chinese government, never officially responsible for 
any information communicated, might easily learn without re- 
buke that exaggerated statements of the numbers, wealth, or even 
wickedness of the people had been gravely published by outer and 
" barbarian " nations, if such errors seemed likely to lessen the 
danger of invasion, or the probabilities of cheap and successful 
aggression. 

The area of China proper is about equal to one-half the area of 
Europe, or to the whole of the central valley of the United States 
from the summits of the'Aileghany or Appalachian range, to the 
Rocky Mountains, and from the Gulf to British America. It has 
an army less in numbers than that of a single European first-class 
power, say France, Austria, or Germany, viz., 240,000 men actu- 
ally in service, and a nominal paper force of 800,000 men not 
withdrawn from other occupations. The entire army is also the 
police force, and is chiefly employed in police duty. The total 
imperial revenue is stated at only £25,175,000, or less than one- 
fourth that of the United States, Great Britain, or France, which 
was estimated in 1875 * to be raised in the following propor- 
tion, viz. : 

A certain tax on provisious £ 6,333,333 

Land tax 5,703,001 

Customs 4,752,001 

Salt 1,584,333 

Sale of titles and privileges 2,256,666 

Miscellaneous 4,546,666 

£25,175,000 
These figures show on their face, by the unnatural repetition of 
3s and 6s, that they are arrived at by taking the total, by guess, 
and dividing it into fractions according to the same system of 
guesswork. This, however, is typical of the mode in which all 
statistics concerning China have been given to the western 
world. 

The estimated revenue and army, above given, would indicate a 
population in China, of from 80,000,000 to 120, 000, 000 only, or say 
twice that of France, after making every allowance for the tim- 
idity of the people, their aversion to war, and the higher value of 
money than prevails in western nations. 

* " Condition of Nations," by Kolb, p. 869. 



538 ECONOMIG PHILOSOPHY. 

Yet the population of China has been persistently stated by 
western nations at from 430,000,000 to 560,000,000 of people. 
But no census has ever been published by authority of the Chinese 
government. The statistics sometimes spoken of as censuses are 
really summaries * or totals, reported by foreigners as having 
been obtained by them from some distinguished mandarin or 
" learned pundit " of the empire, based upon some alleged census. 
Not only is the Chinese government responsible for none of these 
figures, but the fact that any mandarin is responsible for them 
rests on the testimony of an intermediate information and trans- 
lation. Malte-Brun denounced as a fabrication the alleged census 
for 1792, furnished to Sir G. Staunton by the Chief Mandarin 
Chow-tin-jin, and which made the population of China proper 
307,467,200, because the totals for the provinces were all in round 
numbers and those for two of the provinces were alike. In the 
chart of Mr. Martin, the area of two of the provinces is identical, 
and their populations so nearly so as to suggest that one was 
copied from the other. J. E. McCulloch distrusts altogether the 
alleged Chinese censuses, particularly the modern increase of pop- 
ulation which they exhibit, "because China had been long set- 
tled and civilized, her public works had been undertaken and 
completed at a remote period, and the arts have been stationary 
for ages among her people," and thinks the (alleged) "rate of 
increase is such as could have been realized, only in an unoccu- 
pied and very fertile counti^y, by a people far advanced in the 
arts, and that it is all but absurd to suppose that it should be real- 
ized in an old, settled country, with stationary arts, like China." 
De Guignes, after a careful and acute comparison of the evi- 
dences of population in China with those in Holland and France, 
says : " All these reasons clearly demonstrate that the j)opulation 
of China does not exceed that of other countries." R. M. Martin, 
compiler of the ' ' Statesman's Yearbook, " says that the popular 
estimate of 425,000,000 souls for the empire and 405,000,000 for 
China proper ' ' rests upon various missionary reports, none of 
which can lay claim to be more than vague estimates." 

A survey of the censuses themselves compels us to agree with 
these opinions of Malte-Brun, McCulloch, De Guignes, Martin, and 
the others who have written on this subject. The first alleged 
census dates in 1393, prior to the Tartar conquest, when China was 



* The data concerning the population of Cliina as here presented were first published 
in an article by the writer in the Internalional Beview for 1878. 



AN EX A G OERA TED PEOPLE. 639 

under its native empei'ors. It states the population of China 
proper at 60,545,811, or one-half more than the present population 
of either France, Austria, Germany, Great Britain, or the United 
States. Three hundred and sixty years afterward, in 1755, when 
the population had been fully brought under Tartar government, 
it was numbered at 101,328,258, being an increase of only | of 
one per cent, per annum, which would be very fair. But thirty- 
nine years afterward, in 1792, the census furnished by the man- 
darin to Sir G. Staunton, and denounced by Malte-Brun, as- 
signs a population of 307,467,200, or fifteen-fold greater than 
it had been eighty years earlier, which would be an increase of 
about five per cent, per annum, or twenty times the rate of 
increase during the preceding period, and several times greater 
than has been known even in the United States. Meanwhile the 
four censuses attributed to the Tartar dynasty during the fifty 
years from 1662 to 1711, in which it had not complete sway over 
the inhabitants of the southern and western provinces, exhibit 
the population of China proper at 21,068,600 in 1662, 25,368,209 
in 1668, 23,312,200 in 1710, and 28,605,716 in 1711. The mis- 
sionaries, to whom we are indebted for the larger estimates of the 
Chinese population, account for these barren censuses by the 
theory — for which there is no proof— that, during this period, the 
Tartar emperors counted in the census only the people over whom 
they exercised actual sway ; but, on the contrary, in the work of 
John Francis Davis, Esq., late H. B. M. chief commissioner in 
China, entitled "The Chinese: A General Description of China 
and its Inhabitants " (1840), w^e find (page 351) that the same dis- 
crepancy is attributed to the fact that the census taken in 1710 
was taken with a view to distribute according to it the poll-tax 
and military service, while the census taken in 1793 was for the 
avowed object of apportioning goveriament relief during periods 
of drought, inundation, and famine. A retui-n fifteen-fold greater 
was made, when alms were to be distributed in the ratio of the 
population, than when a poll-tax was to be assessed. This will 
not seem strange to Americans, who have observed that in those 
of our States where the chief burden of the tax rests upon lands 
in ]3roportion to their value, the lands are assessed at only one- 
third (in New York) to one-fifth (in Illinois) of their value; 
whereas, were the Government to propose a universal distribution 
of live-stock, seeds, and greenbacks, in proportion to the value of 
the lands in the several States, the lands might possibly be 
I'eturned at from three to five times their value. Mr. Davis 



540 ECONOMIC PHILOSOPHY. 

refers, " on the authority of a Chinese work of some note," to a 
census said to have been taken in the seventeenth year of Kea- 
King (1812), making tlie population 360,279,897; while Dr. ¥ied- 
hurst, a missionary, in his work on "China: Its State and 
Prospects," quotes Dr. Morrison as having obtained, in 1790, 
"exhibits "of the population as then amounting to 143,125,225. 
Here is a bald discrepancy, between two statements only twenty- 
two years apart, of 217,154,672, or nearly two-thirds. Commis 
sioner Davis explains the process of census-taking thus: 

"When a census is especially called for by the emperor, the 
local officers just take the last one and make a lumping addition 
to it, in order to please his Majesty with the flattering idea of 
increase and prosperity. Now, although it is true that the 
enormous census of 330,000,000 was not made to impose on 
foreigners, yet it might have been made by this proud nation to 
impose on themselves." 

If we pursue these estimates in detail, they resolve themselves 
into contradictions as palpable as those which pertain to them in 
mass. Wherever actual statistics exist, the three indices of 
density of population are: (1) The pi'esence of machine power; 

(2) the abundance and rapidity of means of transportation ; and 

(3) the large ratio of the area of cultivated lands to uncultivated. 
The first two are entirely absent in China. No horses or mules, 
camels or oxen, and very few asses are kept, and nearly all 
transportation by land is on the backs of men. This confines 
population to the river-banks, leaving the plateaus with a far 
sparser population, and less tillage, than in Europe. Belgium, 
with a population of four hundred and thirty-six persons to the 
square mile, brings fifteen-seventeenths of her land into cultiva- 
tion. New Jersey, having only one hundred and eight persons 
to the square mile, brings half her soil into improved lands, and 
one-third into actual tillage. In China, on the contrary (accord- 
ing to the statistical chart prepared by Mr. E. Montgomery 
Martin, her Majesty's treasurer for the colonial, consular, and 
diplomatic service in China, and member of the Council of Hong 
Kong, also compiler of the "Statesman's Year-book," and an 
experienced and careful statistician), all these figures are reversed, 
and ordinary principles concerning the population and the factors 
incident to their support are set at nought. Even Mr. S. Wells 
Williams, in his work on " The Middle Kingdom," while disposed 
to believe the Chinese population to be very large, discredits as 
" unparalleled " and needing further proof the enormous averages 



RATIO OF PEOPLE TO TILLAGE. 541 

of 850, 705, and 671 inhabitants to the square mile respectively 
for Kiang-su, Nghan-hwui, and Chih-Kiang — districts where two- 
thirds of the lands are uncultivated. The return indicates 3,200 
to every cultivated square mile in Nghan-hwui, which is a ratio 
eight times greater than in Belgium. A chart presented by Mr. 
Martin contains some statistical information, from which many 
interesting and instructive compai'isons may be obtained. 

By this it appeal's that in China proper but one acre in six is 
cultivated — a datum which, if it has any such basis in fact as 
these elaborate returns seem to indicate, wholly overthrows the 
dense population theory. Doubtless, if alms and relief were dis- 
tributed in the ratio of cultivated acres, an immense area of cul- 
tivation would be returned. Moreover, the army which results 
from and holds in subjection this alleged population, nine times 
as great as that of France, is barely as large as that of France or 
Germany, and less than that of Russia ! It is not a little singular, 
too, that while the Chinese Empire, including Mantchuria, the 
Corea, the Mongol Territory, Thibet, and other outlying pro- 
vinces, has an area of 4,098,823 square miles, of which only 
1,297,999 square miles belong to China proper, yet we find the 
population of the exterior provinces authoritatively (?) stated at 
only about 2,000,000. Is this to be accounted for on the theory 
that relief is never sent into the provinces in case of famine, or 
do the tendencies toward population suddenly disappear with the 
boundary line of the Middle Kingdom, wherein provinces as 
mountainous and sterile as Switzerland appear to be populated as 
densely as Illinois ? 

Comparing the chart with European populations, we find that 
Belgium, a manufacturing center, making use of vast machine 
and coal power, and occupying the position of a metropolitan 
province toward all Europe, and haviiig a population of 436 pex*- 
sons to a square mile, is exceeded by the ratio of Ohih-le, equal 
in area to five Belgiums, Shang-tung, equal in area to six Bel- 
giums, and is nearly doubled in ratio by Kiang-su. Nghan-hwui, 
and Che-kiang, equal together to twelve Belgiums; and yet one 
of these i^roviuces is set down as " sterile,'" and another of them 
as " very hilly but fertile." Nearly the sole machine in use, in all 
these provinces except, the loom, is that by Avhich the priests suc- 
ceed in bringing one hundred thousand different printed prayers 
at once to the eye of Joss. A buffalo hitched to a rude stick 
draws the i)lo\v, and the rice is pounded to flour in a mortal*, 
as in the age of prehistoric man. 



542 ECONOMIC PHILOSOPHY. 

Here, however, arises an econoniic riddle which it would he 
most inverestiiig to clearly solve. Is it possible that the substitu- 
tion of human labor, ^both for animal power and for machine 
power, facilitates such a multiplication of the human species, and 
such an economy in their support, as causes an increase in the 
number of human beings proportionate to the deprivation of ani- 
mals and machines whose places are thus supplied ? In short, in 
estimating Chinese population, for economic purposes, must we 
estimate that their number will be as much greater than that of 
the people in Western nations which turn out a like industrial re- 
sult, as the number of jjeople in the Western nations would be 
greater than it is, if all the cattle, horses, and live-stock of West- 
ern nations, and all their machinery, were included in the census 
according to their " man power"? In dispensing with the aid of 
cattle, horses, mules, and machinery, do the Chinese make room 
for an increase in their relative numbers proportionate to the 
number, and labor power, and power to consume food as well, of 
the cattle, horses, mules, and flesh animals with whose direct 
labor they dispense, or with the nervous and muscular vigor de- 
rived from consuming which, as food, they dispense ? In thus 
taking the place of cattle, horses, mules, and raachinery, do they 
impede their civilization by becoming, to a like extent, virtually 
cattle, horses, mules, and machinery ? 

Grreat Britain is commonly said to have a machine power 
equal to that of 1,000,000,000 human beings — or say, healthy 
Chinamen. If there were, in fact,* half that number of people in 
China, but supplying all their own machine and labor power, 
would the fact cause the Chinese Empire, with 500,000,000 peo- 
ple, to possess only half the productive and fighting power of the 
British Kingdom, with less than one-tenth the Chinese popula- 
tion ? Whether from this cause or not, this seems to be not far 
from the net result. Not only is the productive power, but ap- 
parently the military power, the inventive power, and the think- 
ing power of a people incx^eased in the ratio of its stock of 
machines and live-stock, as accurately as it would be if its cattle 
and engines wei'e endowed with thinking powers. But all these 
appliances are to be considered not merely as producers, but as 
consumers of wealth. They add to the national force and to the 
aggregate earnings of the nation, but they are heavy consumers 
as well. The Chinese, by dispensing with them, lessen their 
national earnings, as indicated by rates of wages, possibly nine- 
tenths, JBut if they avoid a consumption of labor and wealth 



GAIN AND LOSS OF POWER. 543 

equal to eiglit tenths, they still lose only a fifth, in aggregate 
means of consumption, relatively to Western nations, and mean- 
while they render possible a multiplication of human life corres- 
ponding, in some degree, to the Western multiplication of 
animals and machines, whose places they take. The United 
States maintained, in 1880, a population which, if reduced to 
labor power, and power of consumption, so as to measure it 
fairly against the Chinese, would assume something like this 
form : 

Human population 51,500,000 

Horses 10,357,488 

Mules and asses ■ 1,812,808 

Working oxen 993,841 

Milch cows 12,443,120 

Other cattle 22,488,550 

Sheep 35,192,074 

Swine . . . . _ 47,681,700 

Machines possessing a manual or man- 
power equal to 800,000,000 

983,469,581 

Taking the unaided labor power of one human being as the 
unit of account, it would appear that, even if there were in China 
the 450,000,000 of people with which rumor credits China proper, 
still the aggregate labor power, productive power, earnings and 
fighting power, all of which become one power in the last analy- 
sis, which we may call power in exchange, or economic powei', 
would be less than half that of the United States with its present 
60,000,000 of people. The latter, through its possession of 930,- 
000,000 units of labor power, not embodied in men, but 'in cattle 
sources of animal food, and machineiy, would have, for division 
among its 60,000,000 people, the proceeds of the earnings of this 
extra 930,000,000 of units of labor power, from the profit of 
which, of course, would have to be first deducted the cost of 
maintaining all this subordinate labor power. This would bring, 
in the first instance, to each American, as wages, the earnings of 
sixteen units of labor power, or of sixteen men working, lil^e 
Chinese, without machinery. If the machinery cost notliing to 
maintain, then rates of human wages ought to be sixteen times 
higher in America than in China, because it would be sixteen 
times more productive. But if, as we have seen in our chapters 
on ])roflts and capital, the tendency of all the appliances we use 
in labor is toward working at the halves, with those who adopt 



544 ECONOMIC PHILOSOPHY. 

them, then the average cost of constructrng and maintaining 
these aids to labor in America, in the form of macliinery and 
animals, would be half their gross earnings. This would leave 
the average wage of labor in America eight times greater than in 
China, and this result corresponds closely to the fact. Meanwhile, 
however, the Chinese would have for division among their peo- 
ple in the form of food, clothing, and shelter for human beings, 
a fund equal to the expenditure we sustain in maintaining our 
domestic animals, and in building and maintaining our rail- 
ways and machinery. These tend toward a cost identical with 
the average returns on capital actively in use in industry, 
which, as we have seen in the same chapters on profit and cap- 
ital, are twice the average rates on loans : 

The cattle and live stock of the United States are 

worth I 1,800,000,000 

The railways and transportation machinery . . 7,000,000,000 
The manufacturing machinery 3,000,000,000 



$11,800,000,000 

The cost of maintaining which is 15 per cent. ($1,710,000,000) per 
annum, or enough at five cents per day each ($18 per year, which 
is the average Chinese cost of support) to maintain 94,000,000 of 
Chinese laborers in China. 

While the machine and animal power of the United States 
would multiply the pi^oductive power of the American people by 
eight, relatively to that of any nation which, like the Chinese, 
should wholly dispense with them, we do not find that the an- 
nual cost of this animal and machine power in the United States 
— which would be saved in China by dispensing with it — would 
raise a fund adequate to the support of more than 94,000,000 of 
Chinese. While the absence of machine and animal power would 
reduce the average wage per man to one-eighth the American 
wage, it would only amount to a saving which would provide 
for 94,000,000 additional population, out of a total production 
equalling the American product. Very scanty data exist for 
comparign the aggregate value of Chinese consumption with Amer- 
ican. Probably it does not exceed one-half, or perhaps two-thirds, 
in the total.* But assuming it to be equal to the American, the 

* Adam Smith, writing a century ago, says of Cliinese industry : 
"China has been long one of the richest, that is, one of the most fertile, best culti- 
vated, most industrious, and most populous countries in the world. It seems, however. 



- " CHINESE HABITS. 545 

saving- of cost in pi'oducing it, by dispensing with machinery and 
animals, would only provide subsistence for about 94,000,000 xjeo- 
ple, or say twice the population of the United States. 

We may now, with interest, inquire what the sum total of the 
evidence shows to be the actual population of China. For if the 
vast population sometimes attributed to that country actually ex- 
ists, it can not be conceded without admitting that the Chinese 
system of industry is something more even than a great success. 
It would amount to a success far exceeding that of our Western 
system in its ability to maintain numbers in comfoi-t. This, too, 
could not be admitted without at least raising the inference that 
a condition of society which is without machines and animal la- 
bor might find a larger relative place for human labor. This, if 
true, would be an economic fact of the first importance. 

England and Wales, of which five-sixths are cultivated, though 
aided in their labor by a machine power equal to the manual 
labor of the entire population of the globe, and including the me- 

to have been long stationary. Marco Polo, who visited it more than five hundred years 
ago, describes its cultivation, industry, and populousness, almost in the same terms in 
which they are described by travelers in the present times. It had, perhaps, even long 
before his time, acquired that full complement of riches which the nature of its law 
and institutions permits it to acquire. The accounts of all travelers, inconsistent in 
many other respects, agree in the low wages of labor, and in the difficulty which a la- 
borer finds in bringing up a family in China. If by digging the ground a whole day he 
can get what will purchase a f mall quantity of rice in the evening he is contented. The 
condition of artificers is, if possible, still worse. Instead of waiting indolently in their 
work-houses for the calls of their customers, as in Europe, they are continually run- 
ning about the streets with the tools of their respective trades, offering their service- 
and, as it were, begging employment. The poverty of the lower ranks of people in 
China far surpasses that of the most beggarly natioi s in Europe. In the neighborhood 
of Canton many hundreds, it is commonly said many thousand families, have no habi- 
tation on the land, but live constantly in little fishing boats upon the rivers and canals. 
The subsistence which they find th€re is so scanty that they are eager to fish up the 
nastiest garbage thrown overboard from any European ship. Any carrion, the carcass 
of a dead dog or cat, for example, though half putrid and stinking, is as welcome to 
them as the most wholesome food to the people of other countries. Marriage is en- 
couraged in China, not by the profitableness of children, but by the liberty of destroy, 
ing them. In all great towns several are every night exposed in the street, or drowned 
like puppies in the water. The performance of this horrid office is even said to be the 
avowed business by which some people earn their subsistence." 

The notion that the Chinese are thus unclean as to animal food is rendered absurd by 
the fact that they arc vegetarians by habit. The scavenger work referred to may have 
had reference to obtaining materials for the manufacture of glues and fertilizers, in 
which the Chinese carry their economies to a point not known among Western na- 
tions. It would be of great value to the harbor of New York if there were Chinese 
scavengers in boats, like those at Canton, ready to cleanse the harbor of materials 
which are now left to slush back into the sewers and send disease into the habitations 
even of the wealthy. 



546 ECONOMIC PHILOSOPHY. 

tropolis of the world, count only 389 persons to the square mile, 
while the sterile province of Shan-tung, only two- fifths of which 
are cultivated, counts 515. The " sterile and hilly " province of 
Kiang-se, cultivating only one-sixth of its land, counts a popula- 
tion of 421 to the square mile, or about 2, 500 to each cultivated 
square mile, while France, cultivating 93 per cent, of all her 
land, attains only to 186 per square mile, or 208 per cultivated 
squai'e mile. The province of Yun-yan, of whose lands only 
one forty -seventh part is cultivated, and which is " the Switzer- 
land of China, very wild and jungly," claims a population of 51 to 
the square mile, or 2,400 to every cultivated square mile, while 
Illinois has a poj)ulation of only 45 to the square mile, and 157 
to the cultivated square mile. Foo-keen, only one-fifteenth of 
which is cultivated, and which is ' ' very mountainous, but fertile 
where tillable," has a population of 236 to the square mile, while 
Connecticut, cultivating eight-fifteenths of her land, has only 
113.15 ; Massachusetts, cultivating one-third, has only 186.84 ; 
New York, cultivating one-half, has only 93.25 ; and Rhode 
Island, cultivating two-sevenths, has only 166.43. In Wisconsin 
there are five acres of cultivated lands per capita to each person 
supported in the State, while in the very wild and jungly prov- 
ince of Kwei-choo, where only one acre in eighty-four is culti- 
vated, there are ten living persons to every acre of cultivated 
land, making a cultivated acre in a Chinese province, where thex'e 
are plenty of uncultivated acres to spare, support fifty times 
as many persons as in Wisconsin. To credit such statistics is 
needless. 

Travelers through vast regions of the hill country of China, 
away from the rivers, describe them as being as destitute of pop- 
ulation, of roads, of hovels, or of tilled lands, as Tartary. Owing 
to an utter lack of transportation, population is only possible 
along the rivers, and even there it presents no greater appear- 
ance of compactness than in Europe and America, save as a larger 
population live in boats. Let an American immigration pene- 
trate into China, taking with it steam-roads, horned cattle, 
plows, reapers, horses, and mules, opening up the deserted pla- 
teaus to settlement, and it might be found that the Chinese 
empire could triple its present population before its unused 
portions would come into that fullness of cultivation which obtains 
in Belgium. 

Those who have defended the extravagant reports of the popu- 
lation of China have, in one or two instances, obtained stories con- 



CHINA AND AMERtCA. 647 

ceiMiing- the average of cultivation whicli would fit the statistics 
of population. Thus Dr. Medhurst, in his work above quoted 
(1842), declares that " there exists a report, made to the Emperor 
Keen-Lung in 1745, of the amount of land then under cultiva- 
tion; according to which it appears that, reckoning the land be- 
longing to individuals, with that in possession of the Tartar stan- 
dards, the military, tlie priests, and the literary class, there were 
at that time 595; 598,221 English acres under cultivation, since 
which period anew estimate has given 640,579,381 English acres 
as the total extent of occupied land of China." The fact that 
Commissioner Martin five years afterward had never heard of 
such a report, but was furnished with elaborate figures showing 
only one-fourth as large an area of cultivated lands, compels 
distrust of Dr. Medhurst's alleged report to Keen-Lung. Esti- 
mating the population of China, at the same number per 
cultivated acre as are sustained in France, it would amount to 
44,997,600. A cultivated acre will not sustain more than from 
two to three times as many persons in China as in France. 

We find a race probably reaching an aggregate of from 120,000,- 
000 to 150,000,000. Their lack of means of transportation pre- 
vents them from developing from two-thirds to three-fourths of the 
acreage of tillable land in their own country. Hence they are 
slowly dribbling into others. Here they come into conjunction 
with races which are in the midst of an epoch of evolution, in 
the matter of implements of transportation and of agriculture, 
such as tlie world has never before seen. What the age of Peri- 
cles was in the development of Greek art, or that of Justinian in 
the perfection of Roman jurisprudence, that is our own age in the 
matter of transportation and the handling of vast agricultural 
areas. The American people have in the greatest abundance what 
China most lacks — live-stock and agricultural and transportation 
machinery. China, so far as her home trade fails, has a 
surplus of what we most lack — docile, patient, temperate, skilful, 
obedient laborers, with muscles of steel and hearts of women. 
Yet the exchange of these needs is a delicate problem, to be con- 
ducted with tact and prudence on both sides. The Chinese gov- 
ernment is not wholly unwise in fearing the disruption of indus- 
try, and the perils of starvation to millions of Chinamen, whicli 
would result from the sudden breaking up of their long-settled 
habits and channels of industry by any premature introduction 
of railroads, steamers, stationary machinery, and manufactures. 
The.se would underwork the Chinamen themselves, and turn tlieui 



548 ECONOMIC PHILOSOPHY. 

out by millions to die of famine, orto be transported — as lias been 
the fate of the Hindu populations under like causes. Among the 
leading mandarins and diplomats, who accompanied Burlin- 
game's embassy to this country twenty years ago, the opinion was 
freely expressed, that when American machinery and agricultural 
implements could be introduced into China through the services 
of returned American Chinamen, fully educated in their use, so 
that race questions and international issues would not intervene 
to complicate the inevitable labor troubles, then they would not 
only be tolerated but welcomed by the Chinese nation. This is 
sound Chinese statesmanship. So far as it is possible for the 
people of one nation to have duties within the territory of an- 
other, a national duty devolves on Americans to see that it is not 
broken down in China, as its needed counterpart has been in 
India, by Christian bayonets and bullets ! 

The total of arrivals of Chinese in this country, during thirty 
years, have not exceeded 233,000 ; the official figures show 93, 000 
of these to have gone back again ; and, estimating deaths of 
twenty in every thousand per annum, only 105,000 were left, 
when that form of national exclusion which America united with 
England in deiiying the right of the Chinese government to 
adopt against the United States, was adopted by the United States 
against the Chinese. The total arrival was smaller than has 
often come from Europe within two months. Arrivals at the rate 
of 4,000 per annum became particularly terrible in the eyes of 
those very recent accessions to our growth, by a European immi- 
gration, which had freely come at the rate of 600,000 per year. 

At present we send expeditions, innumerable, to explore the 
fields of shifting ice that girt the Polar Circle, where population 
is impossible, and commerce a forgotten dream, while we prac- 
tice international iniquity, founded on economic ignorance, 
towai'd a people whose mere numbers we do not know, within a 
margin of four times the whole population of America or France. 
If we do not know within 200,000,000 its numbers,* how can we 
know its economics or politics? In ignorance of these, so far from 
Western nations being in a condition to assume control of the 
destinies of the Chinese Empire, they have failed to reach a stage 
in which it could be possible for them to judge wisely of their own 
interests relatively to this great people. 

* In Behm and Wagner's Statistical Atlas for IBS'} a reduction equal to the com- 
bined population of America and Italj' is made in their estimate of Chinese population. 
— Behm and Wagner, '" Die Bevolkening der Erde," VII. 



JUSTICE THE TRUEST WISDOM. 549 

The policy of at least postponing, and hindering-, the deportation 
of the Chinese to this country, is doubtless final, so far as legisla- 
tion is concerned, but to render it effective, it is essential that the 
Chinese people shall be permitted to prosper in their industries 
at home. This they can not do, if any foi'eign nation, and espe- 
cially any nation using machinery in manufactures against Chi- 
nese hand labor, is to be permitted to force the products of its 
steam-driven looms, its cottons, silks, and woolen cloths, upon 
the nation among whom cotton, silks, and the loom all had 
their origin. The Chinese will find homes elsewhere, if their 
manufactures shall be subjected to any such immolation as over- 
whelmed the weavers of India. In this regard, Burlingame and 
his embassy clearly saw that the economic interests of the Chi- 
nese nation and of England were at wai", while those of the Chi- 
nese and of the United States are identical. Should Manchester 
looms destroy Chinese manufactures, America would, in spite of 
all statutes, be beset by the fleeing hosts of refugees from 
famine. 

The Chinese Empire is a country of unique economies, yet of 
immense resources. We can not, if we would, fairly compute its 
relative loss and gain, by adhesion to manual against machine 
labor. A nation which can transport its immense products of 
tea and silk, of metals, grain, food, woods, cloths, and furniture 
on the backs of men, over vast ranges of mountains, using no 
other means of transportation, until it reaches its canals and 
rivers, and can do all this because it regards the cost of feeding 
beasts of burden as too expensive, is to us an anomaly. 

But it must not be inferred to be an absurdity. The Chinese 
invest no labor in means of transportation by steam, whereby 
they save a cost relatively to the American people of, say, seven 
billions of dollars, or one-seventh of all the values now existing 
in our republic. They invest per capita probably not more than 
one-fifth as much labor as the American people in habitations — 
one-tenth as much \n beasts of burden, draught animals, and in 
feeding animals kept for food, and perhaps a fourth as much in 
clothing, a twentieth in fmniiture, a tenth in improvements on 
land. This leaves them moi'e time relatively for amusement, 
education and labor, devoted purely to providing themselves with 
food and raiment. Perhaps one-half of what Western nations 
expend time aud effort in producing, Chinese labor exempts itself 
from the tax of producing l)y avoiding the use of it. 

One of the ambassadors accompanying Bui"lingame to Amer- 



650 mONOMIO PHIL OSOPBY. 

ica was asked what he thought of the American industrial sys- 
tem, compared with that of the Chinese. "It is very fine for 
you, " he replied, ' ' because you like to expend vast labor on things 
which we would not care to work for. It would not do for us, 
for we do not care to work so hard. You have very big houses 
which you do not need — a great many animals which you have 
to feed at great cost — much machinery and carriages, carts, wag- 
ons, which you have to labor early and late to keep up, for they 
wear out fast. We don't like these things. We like our small 
houses better, We are less ambitious, but we work less, rest 
more and are more happy." * 

Though the Chinaman's means of production are small, he saves 
the great fund of toil which we expend in producing means of 
production themselves, as distinguished from enjoyable commod- 
ities. All that the Chinaraan does, though it may be done at a 
small wage and a slow rate, is expended directly in producing 
immediate means of sustenance. 

Whether the population of China be the four or five hundred 
millions frequently assigned to it, or the two hundred millions 
assigned to it by the late Minister Seward, or the three hundred 
and fifty millions reckoned by Behm and Wagner, or the one 
hundred and twenty millions herein supposed, it is still a marvel 
of success in an industrial point of view. It maintains a higher 
standard of material comfort than exists in any other part of the 
world except inWestern Europe and America, and a more equal dif- 
fusion of elementary education than exists anywhere except in the 
United States. The thousand years of deepening barbarism , which 
descended upon Europe during the Middle Ages, did not work its 
dark revulsion in China. The libidinous moral chaos, which Gib- 
bon describes as attending the demoralization and downfall of 
Rome, left China still content with the homely Franklinism of 
Kong-fut-zi, the spiritism of La-ot-zi, and the altruism of Saky-a- 
mun-i, or the Buddha. 

When the Ci'usades were desolating the pathway between the 
homes of the Christians and the birth-place of their religion, when 
the ensuing Inquisition and religious wars were throwing their 
lurid light over the career of faith in the West, China knew only 
a toleration so broad that the same person might indulge in the 
threefold faith of being a Confucian in his philosophy, a Taoist 
in his spiritualism, and a Buddhist in his creed. 

* As eigriiftcant of the more restful nature of the Chinese life, the last work on the 
Coreais entitled " The Land of the Morning Rest." 



LET TEEM GO SLOW. " 551 

The retaliations which have been practiced, in exceptional 
instances, upon foreign relig-ious houses have often, if not always, 
grown out of reasons which, rightly, or wrongly, brought 
them into supposed responsibility for confessed foreign interven- 
tions and aggressions of a peculiarly perfidous and cruel character. 
These are nearly or quite the only deduction to be made from a 
record singularly mild, humane, peaceable, and sensible, which 
the Chinese have pursued towai'd the surrounding world. 

The Chinese system of economy, after all due allowance is 
made for it, is still wasteful of human labor relatively to one 
that involves a larger use of animal labor and machinery. Its 
saving at the spigot, like that of all inferior modes of work, is 
eflPected by a spilling at the bung. 

It leaves large portions of the hill country of China untilled ; 
indeed, if any reliance is to be placed on the statistics concerning 
areas of cultivation furnished by the Chinese mandarins, it 
dooms five-sixths of the area of China to waste. Certainly, if we 
could introduce American cattle, horses, and agricultural imple- 
ments into those parts of China which are now excluded from 
cultivation by their distance from the great rivers and canals, a 
gradual but moi'e effective revolution would take place in 
Chinese methods, than would be effected by the introduction of 
I'ailroads and telegraphs. It is probable that it would be 
a like mistake to press the Chinese for the privilege of intro- 
ducing railways before we had introduced beasts of burden, as 
was from the first made, in our treatment of our native savages, 
in trying to convert them directly from a savage and hunting 
race, into a civilized and agricultural one, without passing them 
through the natural intermediate stage of herdsmen and shep- 
herds. The Chinese should have cattle, horses, aiid agricultui'al 
implements, for at least a century, before they could safely or 
wisely permit the building, by a superior race, in their midst, of 
railways and steam manufactories. Their transition, to be safe, 
must be gradual. It must also be largely the work of tiie Chinese 
themselves. Not until the Chinese that come to the United 
States, learn and practice something of our methods of farming, 
will they take back those methods to their own country. Not 
until they do take back these methods to China, can we begin to 
find, in China, that market which will be most beneficial to both 
countries — viz., for ovir live stock, agricultural implements, and 
machinery. The first requisite to a freer and friendlier inter- 
course with China is that we should take jjains to learn more of it. 



552 ECONOMIC PHILOSOPHY. 

A low estimate of Chinese honesty is common among West- 
ern nations, yet it is a curious fact that when the latter obtained 
their silk fabrics direct from China, a silk dress when made would 
stand without support, and wear from ten to thirty years ; indeed, 
would descend to daughters as an heirloom. Now that Western 
integrity has had a chance to expend its exacting energy on the 
manufacture of silks, the article commonly sold will wear but a 
few weeks without destruction, and silks embodying the ancient 
qualities, of durability, and purity, are not obtainable. Indeed, a 
public taste has set in which requires that silks should be rela- 
tively worthless. If any were now put on the market con- 
taining the earlier characteristics, they would meet with no sale. 

They were also the originators of porcelain ware, and of certain 
varieties of cotton cloth, in whose manufacture they are without 
superiors, except as machinery is superior to manual power. The 
interior silk, porcelain, cotton goods, paper and tea trades of 
China, are so much more important and valuable than their export 
or import in any of these lines, that if the latter were entirely 
obliterated or prohibited, prices and supply would hardly be 
affected. The Chinese are so eminent, as manufacturers, that they 
need no foreign trade whatever, and such trade is in no material 
sense a boon to them. Along with this complete versatility in 
manufactures, there has been a total exemption from famines 
and destitution, except as local emergencies are created by an 
overflow of rivers or like calamity, which it is a chief function of 
the imperial government to provide against and alleviate.* 

* Mitchell, " Accompaniment to Map of the World," etc., who places the population 
of China at 200.000,000, says: "A general good-humor and courtesy reign in their 
aspect and proceedings. Flagrant crimes, and open violations of the laws, are by no 
means common. The attachments of kindred are encouraged and cherished with 
peculiar force, particularly towards parents and ancestry in general. The support of 
the aged and infirm is inculcated as a sacred duty, which appears to be very strictly 
fulfilled. It is surely a phenomenon in national economy very worthy of notice, that, 
in a nation so immensely multiplied, and so straitened for food, there should not be 
such a thing as either begging or pauperism. The wants of the most destitute are re- 
lieved within the circle of their family and kindred. It is said to be customary, that a 
whole family, for several generations, with all its members, married and unmarried, 
live under one roof, and with only two apartments, one for sleeping, and the other for 
eating; a system, the possibility of maintaining which implies a great degree of 
tranqnillity and harmony of temper. Within the domestic circle, however, and that of 
ceremonious social intercourse, seems to terminate all that is amiable in the Chinese 
disposition . In every other respect they show no interest in the welfare of their fellow- 
creatures, nor even the common feelings of sympathy. Repeated instances have oc- 
curred of Chinese dropping into the sea, and being rescued by the English, while their 
own countrymen did not take the least notice, or make a single efl!ort to save them. 
Their propensity to fraud has been amply noticed by travelers, but appears to have 



FORCING FREE TRADE. 553 

The state of partial subjugation of Cliina and Japan, by the 
European powers and the United States, in 1854 to 1858, was one 
of the results of the strong tide of opinion in favor of coercive or 
forcible free trade, which culminated in the repeal of the Corn 
Laws in 1846 and the passage of the Robert J. Walker tariff, in the 
United States, in the same year. The platform of the democratic 
party in the United States, at this period, declared it to be one of 
the duties of enlightened nations to pursue an aggressive policy, 
in forcing free trade on nations not disposed to adopt it. The 
gentlemen in America, who were most determined in this policy, 
were the same who were also determined to force slave labor on 
communities whose defective economic education did not enable 
them to perceive its advantages. Mr. Townsend Harris, pur- 
suant to this policy, began his residence in Japan, in 1856, with 
the fixed purpose of wheedling that country if possible, but 
forcing it if necessary, into adopting a tariff which was a copy 
in its essential structure of the Walker tariff of 1846, except 
that in the free-trade point of view it was more enlightened, 
since the duties were lower. The additional enlightenment 
necessary to make the duties lower was communicated, first, by 
an imj)osing and intimidating visit from Commodore Perry with 
an Amei'ican fleet, supplemented in 1858 by the appearance of a 
combined English and French naval force. The treaty thus ob- 
tained was intended, by Mr. Harris, to provide for a duty of five 
per cent, only on effects required for the immediate use of alien 
residents, Avhile goods intended for sale should pay 20 per cent. , 
intoxicating liquoi's 35 per cent., and opium should be prohibited. 
There was also a five per cent, duty on exports.* But Lord Elgin, 
in negotiating the English treaty immediately afterward, caused 
cotton and woolen stuffs for sale to be added to the five per cent, 
list. In 1863 they were cajoled into abolishing the 35 per 
cent, duty on wines and spii'its, and in 1864 they strove to avert 
an armed invasion by transferring a large number of Western 
manufactures from the classification of 20 per cent, to that of five 
per cent." Switzerland, in the same year, " when the European 
fleets were gathering for the assault, obtained a treaty which 
formally authorized the admission of almost every conceivable 
ware at the lowest rate." Under the "most favored nation" 
clause, this enured to the equal advantage of all the other 

been 6omevvhat exaggerated. To the Hong merchants belongs the merit of having 
established a character of very strict honesty; and many even of what are called 
' outside merchants ' appear to be highly respectable." 

* For particulars of the course of Western powers toward Japan, see E. H. House on 
"The Martyrdom of an Empire," in Atlantic Month'.!/, and on " The Tariff in Japan," 
New Princeton Revieiv, January, 188S. 



554 ECONOMIC PHILOSOPHY. 

nations. The greatest hardship of these treaties is that, by a con- 
struction which would not for a moment be entertained between 
western nations, they have now for twenty years been held irre- 
vocable. Western armed greed has denied to both nations an in- 
herent part of their sovereignty. Tlius we see "free trade " trans- 
foi'med into that phase of international piracy, which first forces 
revenue laws upon semi-civilized nations, which are destructive 
both of their revenues and of their manufactures, and then holds 
at the cannon's mouth that these laws are irrevocable, solely 
because they are infamously injurious to the people over whom 
they are imposed. 

At present, while the public expenditure is $80,000,000, and a 
tariff framed for revenue only would produce $15,000,000, and 
one for protection $30,000,000, the tariff for subjugation, imposed 
on Japan by European guns, produces only $2,500,000 a year. 
Even with these low rates of duty, British officials openly threat- 
en the Japanese with cannonading, if they attempt to suppress 
smuggling. Thus, while in protective countries free traders 
object to protective laws, on the ground that they encourage 
smuggling, when, as in Japan and China, the duties are reduced 
virtually to 3 per cent, they flourish their fists under the nose of 
the officials and say : "Stop our smuggling if you dare." In 
1870 an imposing and dignified embassy of Japanese notables 
visited Europe and America to urge the restoration of their 
clear national rights. Their request was as firmly ignored 
as if orientals had no rights which occidentals could be bound 
to respect. The taxes of Japan are collected almost wholly 
from land. Mr. House, long and amply familiar with the coun- 
try from thirteen years of residence in it, says: " The civil war, 
which swept over the country in 1868, was infinitely less devas- 
tating in its effects upon the solid prosperity of the people, than 
the disruption caused by the commercial invasion of the few pre- 
ceding years. Intercourse with strangers had largely augmented 
the national expenditures, and at the same time had drained the 
sources of supply. The cultivators of cotton, sugar, and otlier 
staples, which had been partially extinguished by excessive im- 
portation, were incapable of meeting the demands upon them. 
In several provinces the levy could not be collected by any 
process. Attempts to enforce it provoked revolts. . . . The 
gradual growth of external commerce wrought nothing but 
injury, for the indulgence in foreign novelties cost the country 
many millions of treasui^e, which were never reimbursed by an 
equivalent influx from abroad," 



CHAPTER XIV. 

THE FREE TRADE CRITICISM. 

197. Methods of Argument Concerning Protection 
and So-called " Free Trade." — There lias been great repug- 
nance, impatience and supercilious contemptuousness, on the part 
of a class of theorists, to the doctrine and practice of protection 
to industry, by taritfs, bounties, and navigation laws. This is the 
more singular, as such protection as a practice constituted, for 440 
years, a leading feature in the policy of Great Britain,* is still prom- 
inent in her laws and policy, though veiled in some of its outward 
aspects, and pervades more or less the policies of all other 
nations except Turkey, India, and (by force) China and Japan. 

The Marquis of Salisbury recently remarked in debate : ' ' The 
whole civilized world rejects free trade." Protective theories 
have the qualified endorsement of Adam Smithf and John Stuart 

* A working-man, P.C.Carroll, of Louisville, Ky., writes to the Bulletin of the Ameri- 
can Iron and Steel Association the following well-condensed summary of English pro- 
tective legislation prior to 1846 : 

" Knight's History of England, on page 123, vol. 2, tells us that in the third year of 
Henry IV. England levied a prohibitory tariff on the importation of laces, rib- 
bons, fringes, twined silk, embroidered silk, bodkins, scissors, pins, knives, daggers, 
razors, andirons, gridirons, hammers, pincers, fire-tongs, ladles, dripping-pans, candle- 
sticks, playing cards, and dice. This act graced the statute books of England from 1402 
to 1842. Lord Stanhope is not a very bad authority on ' English laws.' This is what he 
says, in the 34th volume of the English Parliamentary Debates, page 178 : ' We have 
now 977 acts of Parliament protecting our woolen industries; 964 acts protecting the 
fisheries ; 460 acts protecting our tobacco manufacturers ; 283 acts protecting our cur- 
rency ; and 440 acts regulating the wages of labor.' His lordship says that 194 of 
those acts were entirely prohibitory. John Wade ( 'Black Book, or Corruption Un- 
masked,' tells us that, within his own recollection, the English Parliament passed 200 
acts protecting the manufacture of alcoholic liquors; 54 acts protecting her cotton man- 
ufactures, and 22 acts protecting iron, steel, lead, copper, tin, etc., were scattered over 
and nearly filled 1,000 volumes of Parliamentary Reports." 

t Adam Smith in book iv., chapter ii., page 203, of the " Wealth of Nations," says : 

"Though there seem, however, to be two cases in which it will generally be advanta- 
geous to lay some burden upon foreign for the encouragement of domestic industry : 

" The first is when some particular sort of industry is necessary for the defence of the 
country. 

" The second case is when some tax is imposed at home upon the produce of domestic 
industry. 



556 ECONOMIC PHILOSOPHY. 

Mill,* even while they call forth the petulance of both, and pro- 
voke the ill temper of Mill. Jevons, Cairnes, Bonamy Price, 
Fawcett, and Thorold Rogers all lose their good manners on no 

" So there are two others in which it may eornetimesbe matter of deliberation : 

" 1. When some foreign nation restrains, by higli duties or prohibitions, the importa- 
tion of some of our manufactures into their country. 

"2. When particular manufactures, by means of high duties or prohibitions upon all 
foreign goods which can come into competition with them, have been so far extended 
as to employ a great number of hands. Were those higli dnties and prohibitions talien 
away all at once, cheaper foreign goods of the same kind might be poured so fast into 
the home market, as to deprive all at once many thousands of our people of their ordi- 
nary employment and means of subsistence." 

The looseness of Dr. Smith's specification will appear when we consider that 
each of the classes he specifies includes nearly every thing. Woolen goods and there- 
fore sheep, leather and shoes and tlierefore cattle and tanneries, food in independent 
supply, medicines, ships, printing facilities, railways, telegraphs, iron and steel roads, 
bridges, all are important as elements in national defence. As to the second 
case, taxes are always imposed at home on the products of domestic industry. The gen- 
eral burden of domestic taxation has to be borne by its domestic labor (except in so 
far as it may, through certain forms of taxes on imports or exports, collect a revenue 
from foreign producers of our imports, or coitsumers of the exports of those countries 
which tax exports). It all rests, therefore, with these exceptions, on domestic pro- 
ducts. The third specification is also, universal, since at all times foreign nations 
restrain, by high duties on importations, certain imports from our country into theirs. 
England restrains by a 500 per cent, duty the import of leaf tobacco from the United 
States, and prohibits, essentially, our manufactured tobacco. Hence, under this third 
specification, we are to at least deliberate whether we should not protect our woolen 
manufacture against the English. 

In his fourth specification, Dr. Smith does not point out the chief evil result of pre- 
maturely removing a productive duty, viz., tliat it may prevent that expansion of the 
dimensions of the domestic industry, which is found by experience to be often, and al- 
ways if the country has the proper natural resources, the shortest road to cheapness. 

* John Stuart Mill, volume ii., page 538, comes very near giving an adequate state- 
ment of one of the good effects of protection ; he says : 

'• The only case in which, on mere principles of political economy, protecting duties 
can be defensible, is when they are imposed temporarily (especially in a young and ris- 
ing nation) in hopes of naturalizing a foreign industry, in itself perfectly suitable to the 
circumstances of the country. The superiority of one country over another, in a branch 
of production, often arises only from having begun it sooner. There may be no inher- 
ent advantage on one part, or disadvantage on the other, but only a present superiority of 
acquired skill and experience. A country which has skill and experience yet to 
acquire, may in other respects be better adapted to the production than those 
which were earlier in the field ; and besides, it is a just remark of Mr. 
Rae that nothing has a greater tendency to promote improvements, in any 
branch of production, than its trial under a new set of conditions. But it cannot be 
expected that individuals should, at their own risk, or, rather, to tlieir certain loss, in- 
troduce a new manufacture and bear the burden of carrying it on, until the producers ■ 
have been educated up to the level of those with whom the processes are traditional. 
A protecting duty, continued for a reasonable time, will sometimes be the least incon- 
venient mode in which a nation can tax itself for the support of such an experiment. 
But the protection should be confined to cases, in which there is good ground of assur- 
ance that the industry which it fosters wiil, after a time, be able to dispense with it ; nor 
should the domestic jiroducers ever be allowed to expect that it w^l be continued to 



ARROGANCE OF FREE TRADE SECT. 557 

other issue but this, and, * singularly enough, their lack of all pa- 
tience in investigation, candor in analysis, and even honesty 
of statement, seems proportionate to the fervor of their anger. Of 
late Henry Sidgwick of Cambridge, C. S. Devas in his "Ground- 

tliem beyond the time necessary for a fair trial of what they are capable of accomplish 
iug." 

Again discussing the English navigation laws, he thus justifies their enactment and 
places the absence of- their further need on the protective ground that English ships 
and sailors can now navigate as cheaply as those of any other country. He says : 

" When the English navigation laws were enacted, the Dutch, from their maritime 
skill and their low rate of profit at home, were able to carry for other nations, England 
included, at cheaper rates than those nations could carry for themselves, w'hich placed all 
other countries at a great disadvantage in obtaining experienced seamen for their ships 
of war. The navigation laws, by which this deficiency was remedied, and at the same 
time a blow struck against the maritime power of a nation with which England was 
then frequently engaged in hostilities, were probably, though economically disadvan- 
tageous, politically expedient. But English ships and sailors can now navigate as 
cheaply as those of any other country, maintaining at least an equal competition with 
the other maritime nations, even in their o\vn trade. The ends which may once have 
justified navigation laws require them no longer, and afford no reason for maintaining 
this invidious exception to the general rule of free trade." 

* As specimens of perfervid temper, not backed by the least pretence of basis or justi- 
fication, we cite the following, whichindicatethat if arrogance and effrontery can suc- 
cessfully continue to bulldoze the British minority, there will never be any dissent in 
England from views in which, as the Marquis of Salisbury says, the whole civilized world 
is against the English. 

Thorold Rogers ("Six Centuries of Work and Wages in England," p. 522) says- "From 
sheer folly or from interested motives, a belief that better profits would ensue to em- 
ployers, or in order to serve party ends by giving a false interpretation of economical 
phenomena, there are persons who are foolish or wicked enough to advocate the return 
to a protective policy in England under the name of fair trade. . . . Such shameless 
mendicancy is in keeping with the conditions of aristocratic government, which has, in 
the history of English finance and legislation, put the burdens of state on the many 
and freed the property of the few, but when it is fully understood, it will not serve the 
men who advocate it, or the party (Tory) which has the meanness to encourage it." 

Bonamy Price (" Practical Political Economy" p. 300) says: " We are again summoned 
not by the brilliant fallacies of some clear thinker, but by the renewed vigor and pro- 
gress of protection in the practical world (p. 299— in Germany, in France, in the United 
States, in Canada, in most of the British colonies, countries full of men of iiigh intelli- 
gence and ability) — to reargue the first principles of free trade. . . . Prelection 
seems to be indestructible — a weed that no intellectual or social culture can root up — 
a principle that is part of human nature itself." 

On p. 315 Price says : "No name of high celebrity is put forward so incessantly, as 
the shield of their doctrine, by the advocates of protection, as that of Mr. Mill, and so 
great is the support which it gives to a policy so profoundly injurious to the happiness 
of mankind, that it may almost be questioned whether Mr, Mill has not done more harm 
to the welfare of the human race by the countenance he has given, though limited, to 
protection, than he has done good by all his other writing on political economy." 

Price says that " free trade is the one subject in political economy which is suscepti- 
ble of complete demonstration." Yet in his 40-page chapter he substitutes assumption 
for proof, and begs the whole question, getting out of the supposed argument with- 
out stating a single economic fact with definiteness enough to suggest a conclusion. 

Prof. A. L . Perry says : " There is nothing original and nothing American and uoth- 



558 ECONOMIC PHILOSOPHY. 

work of Economics," R. S. Moffat in his" Economy of Consump- 
tion " have followed in the wake of Judge Byles, Sir Edward Sul- 
livan and the few others who have kept up the battle for the protec- 
tive policy on English soil. Lord Beaconsfield, in his life of Lord 
George Bentinck, indicates his own protectionist convictions, and 
there is no reason to believe he ever departed from this convic- 
tion. 

The besetting sin of the free-trade school of writers is, that they 
advance the puerilities of children, with the pompousness of kings, 
and the unscrupulousness of rogues, and then say this is de- 
monstration, when no intelligent mind sees in it the quality of 
conclusiveness, and often it lacks all semblance of knowledge, or 
candor, or economic expertness in thinking. For instance, 
Bonamy Price, in 1875, writes ("Practical Pol. Econ.," p. 314), 
" In what state would now be the colossal manufactures of Eng- 
land if the duties on foreign corn had kept bread dear over the 
whole land ?" We infer, therefore, that Bonamy Price believes 
that the repeal of the coi-n laws in 1846 caused a large permanent 
reduction in the prices of bread-stuffs. On the contrary, turning 
to the Encyclopaedia Britannica (Corn Trade), we find that in the 
seven years ending Christmas, 1846, the prices per imperial bushel 
were : 

Wheat. Barley. Oats. Total. 

7s. Oid. 4s. 2s. Sid. 13s. 9d. 

The average gazette prices per imperial bushel in the seven years 
ending 1875 were: 

Wheat. Barley. Oats. Total. 

6s. ^d. As. lOd. 2,8. 2\d. 14s. 7U. 

Here are two free- trade authorities, the professor and the 
" Encyclopaedia," the professor boldly assuming that the repeal 
of the corn laws made bread cheap, and therefore built up the 
colossal manufactures of England, and the "Encyclopaedia" 
trying to prove that the withdrawal of protection from the farmers 
benefited them, for breadstuffs sold higher under free trade than 
ever! The "Encyclopaedia" states the prices correctly, and they 

ing continental in tlie petty and piddling and devilish devices of ourprotection system." 
(19th ed. p. 508.) 

Jevons eays :" Protectionists overlook tlie fact (1) that the object of industry is to 
make goods abundant and cheap ; ('3) that itis impossible to import cheap foreign goods 
witliout exporting home-made goods of some sort to). ay for tliem." 

It is difficult to conceive how a sane man could utter these words of Jevons without 
ehame. 



POMPOUS DODGING. 559 

sliow tliat bread was not permanently cheapened. So that which 
the Oxford professor offers, as a demonstration, turns out to be a 
falsehood. 

Again Bonamy Price says (p. 320) at the repeal of the corn laws 
"the whole agricultural hierarchy" (with what candor can a 
minority, that is outvoted on a question, be called a "hierarchy," 
especially when it consists of sevei-al millions of farmers?) "land- 
lord, farmer, and laborer, believed that the wheat lands of England 
would go out of cultivation." This was not the exact charge, so 
much as that the wheat lands of Ireland and Scotland would go 
out of cultivation. But now we look to see Price show that the 
wheat lands, even of England, did not go out of cultivation. 
Does he do so ? Not at all. He says : ' ' Parliament was not deterred 
by this alarm ; it persevered with the abolition of the duties on 
foreign corn. And what has been the final issue ? An improve- 
ment in the efficiency and productiveness of agricultural labor 
unparalleled in the kingdom, a growth of wheat per acre unknown 
to former ages,' a rise of rent for the landlord, and better wages 
for the laborer ! " 

Suppose all this were true, does it refute the prophecy that 
wheat lands would go out of cultivation ? It has no bearing on 
it. It does not appear that the landlord, farmer, and laborer pre- 
dicted that hogs, cattle, or poultry could not be raised at a profit, 
or that fai^ming of all kinds would be destroyed. They only pre- 
dicted that^ljeat lands in England would go out of cultivation, 
i.e., that enough English wheat would cease to be cultivated, and 
would give place to foreign grown wheat, to leave the aggregate 
suj)ply the same and the average price the same. This was a 
significant prophecy, for, if true, it exploded the whole free trade 
argument at two points, viz. , at the point where it claiined that 
free trade would cheapen bread, and at the point where it claimed 
that it would not send wheat out of cultivation. This prophecy 
Price seeks to explode as false. How? Shades of the logicians! 
By proving that the English went to raising hogs and cows. 
Meanwhile the Encyclopsedia Britannica concedes that between 
1852 and 1867 there was a net decline in cultivation, to all crops, 
over all gains, in the fifteen years, of 447,000 acres in England, 
and a net decline in tillage of wheat, oats, beans, peas, and bare 
fallow of 1,297,000 acres iii England alone, while in Scotland and 
Ireland " the decline was more marked, the production in wheat 
falling off one-half." And yet an economic teacher, who thus 
does not even juggle with his facts, but openly mis-states them. 



560 ECONOMIC PHILOSOPHY. 

not only asks us to regard his unscrupulous errors as conclusive 
demonstration, but proceeds to dignify us as "weeds" if we 
suggest that he is not even bright. 

Turning to Mr. Jevons, we would be justified in expecting, from 
the value of his arguments on other questions, that he would 
handle this one. in a manner that would do him credit. Instead 
of this we find him shutting his eyes to the pith of the protection 
argument, and in order that it may be possible for him to refute 
it, he states it in a manner to drop its entire bottom out in the 
statement. Protectionists do not claim that buying a commoditj'^ 
abroad does not imply the employment of any home labor what- 
ever. They know and admit that it implies the employment, in 
this country, of the labor and capital which produce whatever 
domestic product is given in exchange for the imported articles. 
What they claim is, that the making of the article sought, in this 
country, employs, as compared with its importation from abroad, 
two ddhiestic capitals, and two sets of domestic labprers, instead of 
only one,— viz., that the making it here employs both the capital 
and labor which produce the article (corn, for instance) which is 
given in exchange for the thing sought (cloth or iron), and also 
the capital and labor which produce the cloth and iron themselves, 
whereas the importing it from abroad gives employment to only 
one domestic capital and set of laborers, while the capital and 
labor employed in producing the imported iron or cloth are a for- 
eign capital and foreign set of Mborers. This point was stated 
clearly by Adam Smith, in defining the greater profit of home 
over foreign trade. Side by side with this, is the claim that 
the production at home, as compared with the importation, in- 
volves two domestic consumptions of px^oducts instead of one, viz. , 
the domestic consumption of the corn, and of the cloth or iron for 
which it is exchanged, while the importation of the cloth or iron 
involves a domestic consumption only of the cloth or iron, and a 
foreign consumptioii of the corn. Hence domestic production, 
as compared with importation of foreign goods, involves a doubled 
consumption and a doubled production. 

Instead of meeting this point, Mr. Jevons acts as if he thought 
he had met it, in the following statement : * 

"But, it may be objected, what is to become of workmen at 

home, if all our supplies be got from another country ? The reply 

is that such a state of things could not exist. Foreigners would 

never think of sending us goods, unless we paid for them in goods, 

* "Primer of Pol. Econ.," p. 133. 



JEV0N8 SOMETIMES NODS. 561 

or in money. Now if we paid in goods, workmen will, of course, 
be needed to make those goods, and the more we buy from abroad 
the more we shall need of home produce to send in exchange. 
Thus the purchase of foreign goods encourages home manufac- 
tures in the best possible way, because it encourages just those 
branches of industry for which the country is most suited, and by 
which wealth is most abundantly ci-eated." 

Here the point that domestic production employs two capitals 
and sets of laborers, while iinportation from abroad employs only 
one, is met by saying, " No, you are mistaken, for I have'clearly 
pointed out to you, that importation does employ one domestic 
capital and set of laborers." And then protectionists are gravely 
told that their views are persistent weeds, which no intellectual 
culture can overcome ! 

198. Siclgwick on Protection to Native Industry. — 
Nearly all the writings of English economists treat the protection 
question in a manner which is slovenly, when brought into con- 
trast, with the elaborate thoroughness, and economic acuteness, 
with which it has been ti'eated in America by practical statesmen, 
and by a somewhat numerous class of writers. Of late, however, 
a school of writers is arising which promises more fairness. 
Prof. Henry Sidgwick of Cambridge * holds that from the point 
of view of abstract theory, protection may, under certain prob- 
able circumstances, ' ' yield a direct economic gain to the protect- 
ing country, but that it is difficult to secure in any government 
sufficient wisdom, strength, and singleness of aim to introduce 
protection, only so far as it is advantageous to the community, 
and withdraw it inexorably, so soon a* the public interests require 
its withdrawal." Hence, he thinks it practically best "to adhere 
to the broad and simple rule of taxation for I'evenue only." 

This statement seems to us like the distant speculations of a 
closet-thinker, who means to be just but has had no opportunity 
for close or minute observation of the operations of a protective 
system of duties in detail. It does not require "wisdom, sti'ength, 
or singleness of aim " to " introduce protection only so far as it 
is advantageous to the community. " Protection introduces itself, 
and only so far as it is advantageous to the community, by the 
simple act of attempting to lay a duty for revenue only, on any 
foreign product which the taxing country has all the natural re- 
sources to produce, but which for lack of some purely artificial 
facility, such as that the price shall be equal to its present cost of 

*The Principles of Pol. Econ., p. 485. 



562 ECONOMIC PHILOSOPHY. 

production, or such as low-priced labor or capital, or raw mate- 
rials, or implements or machinery, it has not yet begun to pro- 
duce. So naturally does protection introduce itself from the 
passage of a tariff for revenue only, that when England imposes 
a duty of 3s. 6d. sterling (87c.) per pound on the importation of 
leaf tobacco, she is obliged to prevent protection from introduc- 
ing itself, by enacting that leaf tobacco shall nowhere be culti- 
vated in the United Kingdom. For, if she did not make it 
criminal to cultivate the leaf, Irish and Scotch farms would 
immediately be covered with tobacco, the price of which would 
soon fall under domestic competition to the cost of production, 
say Sd. per pound, and from the time the price fell below 3s. 9d. 
per pound, the duty, now maintained as a revenue duty by pro- 
hibiting the production, would act as a protective duty prohibit- 
ing the importation. 

English economists assume that the government needs no 
"wisdom, strength, or singleness of aim " to enable it to forbid 
the production of a crop, whose production, if permitted, might 
bring prosperity to millions of people who sadly need prosperity. 
But in the view of an American, a governnient requires far more 
wisdom, strength, and singleness of aim to justify it in prohibit- 
ing a domestic industry than in prohibiting an importation. In- 
deed, the American government is in one sense compelled to be 
protective, since in order not to be protective it would have to 
possess the power, which England exercises in the case of tobacco, 
to prohibit a domestic industry. Else the duty it lays for 
"revenue only" would immediately cease to produce "revenue 
only," and would begin to produce protection to the domestic 
protected crop. But the government of the United States would 
search in vain, in the Federal Constitution, for any clause empow- 
ering it to prohibit any domestic production, for any purpose. It 
has never tried it, and the thought of it is peremptorily inadmis- 
sible, and, from our American standpoint, despotic, wasteful, 
cruel, and barbarous. Since, without the power to suppress the 
domestic production, we could not prevent the duty on the impor- 
tation from acting with a protective effect, Prof. Sidgwick will 
see that, so far from its being true that a tariff for revenue only is 
either a broad or simple rule of taxation, it is in the United States, 
an absolutely unattainable system, unless we could by constitu- 
tional amendment clothe the Federal government with a new 
power, the exact reverse of the power it was chiefly created to 
manifest, viz. , a power to prohibit and destroy domestic indus- 



Q VERNMEN'T AN A GENT. 663 

tries, to prevent their product interfering with government 
revenue from imports. 

Professor Sidgwick seems further to overlook the fact tliat if a 
duty on an import does not render it ' ' advantageous to a commu- 
nity " to produce a commodity, that contmuiiity will not produce 
it, and the duty will remain a purely revenue duty. Such were 
the American duties on tea and coffee prior to their repeal in or 
about 1870. The fact that the duty begins to operate protectively 
is indicated by the fact that it begins to be " advantageous to the 
community," or to some of its membei^s, to produce the commod- 
ity. No injury to government revenues sets in, until there 
begins to be a benefit to the community, in the introduction of a 
new industry. It really needs no argument to prove that a new 
avenue of industry, source of profit, or means of occui)ation, 
to a considerable number of people, must be of more importance 
to a government itself, than the drying up of one of its sources of 
revenue, from importations. For the entire revenues of govern- 
ment are very small, compared with the revenues of the whole 
people, seldom exceeding one-twentieth, and when a new indus- 
try is set on foot, affecting the revenues of the people at large, the 
chances are about twenty to one that its importance to them will 
exceed in value its importance to their agency for certain limited 
purposes, the government. Indeed, viewing the government as 
an agent, and the people as their principal, it is a species of breach 
of trust for the agent to sacrifice the principal's revenues to his 
own, as England does in suppressing the cultivation of tobacco in 
the United Kingdom. It is a misnomer to style it a duty "for 
revenue only," when it is a duty "for revenue" and also for 
" the suppression of a domestic industry." Hence, the fact that 
it becomes advantageous to a part of tbe ]3eople to produce a com- 
modity is to be assumed, or at least will be assumed, in all demo- 
cratic countries, to be of more importance than any loss the 
government revenues may sustain by its production ; for the 
government is a mere agency, and on a question of relative pro- 
duction should prefer the interests of the people to its own. 

But the chief obscurity in Pi-of. Sidgwick's passage lies in the 
fact that he does not seem to have observed that when a protective 
duty, once wisely laid, is working protectively, there can be no 
public interest that can require its withdrawal, so far as its effect 
upon prices is concerned. For its function is to create a domestic 
competition in the production, which, beginning when the price 
of the domestic article is equal to the foreign price plus the 



564 ECONOMIC PHILOSOPHY. 

duty, will continue to reduce the domestic price until it comes 
down to the level of the foreign price, and becomes an article of 
export from the country imposing the duty, to the countries from 
which it formerly imported. This is exactly the series of stages 
through which France has gone in the production of porcelain, 
raw silk, and silk goods, cottons, woolens, and sugar, through 
which England advanced by means of her protective duties on 
woolen goods, iron and steel manufactures, coal, cottons, carpets, 
silks, etc. , and through which America has advanced in farming 
implements, heavy machinery, fire-arms, fire-engines, carpets, 
cottons, musical, mechanical and mathematical instruments, raw 
cotton, etc. When the protective duty has brought the domestic 
price, by competition among domestic producers, down to the 
foreign, it is absurd to say that any public interests requii'e its 
withdrawal, because the statute imposing the duty no longer 
affects prices, which are exactly what they would be if the statute 
were repealed. Until the duty has brought the domestic price 
down to a level with the foreign, it is absurd to say that any pub- 
lic interest requires its withdrawal, unless we also say that no 
public interest ever required it to be imposed, which we Can not 
say so long as it is creating a domestic competition adequate to 
bring the domestic price down to a level with the foreign. But 
to say this is to say that it has not worked protectively at all, and 
has not stimulated the domestic production. And to say this in 
turn is to say that it has been a duty for revenue only, and has 
not raised the price of any thing which any domestic producer 
had the facilities to produce. Hence, the plea that a public 
exigency demands the repeal of a duty involves one or the other of 
two corollaries — either that the person rriaking the plea does not be- 
lieve in a protective duty at all, or that the duty in question has not 
been a protective duty in its action. For every truly protective 
duty repeals its own effect as a tax, when it runs its full course, 
and never needs repeal by a legislature for any economic reason. 
Prof. Sidgwick says that ' ' the question a statesman is usually 
called on to consider is w^hether a merely temporaiy protection 
is in the interest of a particular nation ; and to affirm sweepingly, 
that this is opposed to sound economic doctrine, appears to me a 
simple and palpable blunder."* "Such protection, of course,t 
so long as it continues necessary, imposes an extra tax on the 
consumers of the article protected. |. But there are conceivable 

*" Principles," etc., p. 486. tib., p. 413. 

JThis partial error is corrected subsequently. 



TAXING FOEEIGN PRODUCERS. 565 

cases in which the loss to a country, thus caused, might be com- 
pensated by the ultimate economic gain accruing from the 
domestic production of a commodity now imported, while yet 
the initial outlay, required to establish the industry without the 
protection, would not be likely to be compensated to the private 
capitalists that undertook it. This would be the case, if the need 
of the outlay were of such a kind that, when once adequately met 
by the original entrepreneur, it would no longer exist for 
others, or would exist in a much less degree, since (in that case) 
almost as soon as the industry began to be profitable, com]3etition 
would tend to reduce profits again, bringing prices to a point at 
which they would be remunerative to the later comers, but not 
to the introducer of the industry who had borne the initial 
sacrifices." 

Professor Sidgwick then proceeds to argue that, on purely 
economic grounds, there would be a direct gain if the manufacture 
of iron in Michigan could be protected by duties against the free 
importation of iron from Pennsylvania. He then (p. 491) pro- 
ceeds to consider ' ' how far a share of the loss, involved in 
protection, can be thrown on the foreign producers on whose pro- 
ducts the protective duty falls. It is obvious that this result will 
be prima facie attained, so far as the reduction in the demand 
for the taxed foreign products tends to lower their price, and 
causes them to be sold, in the protecting country, at a rate less 
than their previous price plus the import duty. Free traders are, 
of course, right in pointing out that, so far as this is the actual 
effect of import duties, such duties do not also fulfil their sup- 
posed primary end of protecting native industry, =^ since to what- 
ever extent the foreign products are still purchased, to that extent 
the native products are not encouraged. 

"But this in no way proves the inexpediency of the duties in 
question, since they may very well give adequate encouragement 
to native industry without completely excluding foreign pro- 
ducts; and it can not be an objection to them from a jDurely 
national point of view, that a part of their effect is merely to 
levy a tribute on foreigners for the national exchequer. A simple 
case will show, a duty may at once protect the native manufac- 
turer adequately, and recoup the country for the expense of pi'o- 
tecting him. Suppose that a five per cent, duty is imposed on 

* Practically the same duty may give revenue in part and protection in part, revenue 
on the portion of goods it admits, protection from the excess, which would be admitted 
were there no duty at all, over the quantity actually admitted under the duty. 



566 ECONOMIC PHILOSOPHY. 

foreign silks, and that in consequence, after a certain interval, 
half the silks consumed are the product of native industry, and 
that the price of the whole has risen two and a half per cent. It 
is obvious that under these circumstances the other half which 
comes from abroad yields the state live per cent. , while the tax 
levied from the consumers on the whole is only two and a half 
per cent. ; so that the nation in the aggregate is at this time 
losing nothing by protecting, except the cost of collecting the 
tax, while a loss equivalent to the whole tax falls on the foreign 
producers." 

Professor Sidgwick, therefore, holds that protective duties, 
when not high enough to completely exclude the product pro- 
tected against, " will partly have the effect of levying a tribute on 
foreign producers, the amount and duration of which may in 
certain cases be considerable." This power should be exercised 
with caution lest it lead to like protective duties on the part of 
other countries.* Still, in a guarded way. Prof. Sidgwick also 
argues that a country, by protecting its industries, may maintain 
a higher standard of wages than its competitor under free trade 
would maintain, and in this way the former may draw away a 
part of the population and wealth-producing power of the free- 
trade competitor. 

199. Moffat on Protection in Growing Countries. — Mr. 
Robert Scott Moffat, in an elaborate work entitled ' ' The Economy 
of Consumption, " says (p. 345): "The population of countries 
which have a redundant supply of food is naturally a growing 
one,t and, where thei-e are no artificial obstacles, its growth is 
usually rapid. The spare supplies of such communities are con- 
stantly encroached on, and absorbed, by home wants. But this 
natural absorption is hastened by the conditions arising out of 
the commercial relations of these countries with the countries 
which they supply with food. This commerce gives them the 
initial advantage of enabling them, by supplying their other 
wants, to turn their whole industry in the one direction, and 
thus secures a rapid expansion of the agricultural basis of indus- 

* Obviously only a benefit to mankind, and to both countries, would ensue if it did. 

t This statement illustrates the risk of even plausible a priori assumptions in 
economics. Ireland, Egypt, Persia, and India, all have redundant sapplies of food 
even in the years when their famines have swept off the people most remorselessly 
Ireland especially exported large quantities of food to England in the years of the Irish 
famine, producing far more than would have sufficed for the consumption of her 
people, but it was drained away to pay for manufactured goods which idle Irish capital^ 
and idle Irish labor, should have produced. 



HOME TRADE. 567 

trial organization.* Commerce, moreover, gives them the 
nucleus of towns, combining with an incipient organization of 
industry a training in the spirit of enterprise and sj)eculation. 
It is impossible tHat a free country can rest in this position. 
Apart from industrial advantages, there are social and political 
motives which prom])t it to aim at, and strive for, a comjilete 
organization of its home industry. From an industi'ial point of 
view there are also many advantages in the possession of a fully 
organized industrial system, and the immediate command of 
every variety of industrial skill, Avhich are not to be measured by 
the mere price paid for commodities. 

" There are also various reasons, already hinted at, in the com- 
mercial relations of these countries with the manufacturing ones, 
to quicken their zeal on behalf of a home organization of industry. 
There are the fluctuations of a commerce which, in addition to 
the uncertainties produced by its own uncontrollable complexity 
and world-embracing magnitude, resulting in periodical disor- 
ganizations and prostrations of industry, is liable to similar dis- 
turbances from political causes throughout the whole of its wide 
area. The immediate gain of taking foreign products is frequently 
also more apparent than real. Cosmopolitan manufactures are 
always the most doubtful in point of quality, f and initial cheap- 
ness is not always confirmed by the test of use. Countries in 
this position ar-e thus naturally inclined to favor the protection 
of native industry, and this is the exception to the natui'al pro- 
gress of industry towards liberty. 

' ' This tendency towai'ds protection is, as I have said, natural, 
and it is fully j^istified by the strictest economic reasoning. The 
fanatical intolerance, with which it is often assailed in this 
country, is the result simply of ignorance, and the prejudices bred 
by self-interest. 

"The aim of the policy is manifestly a legitimate one. It has 
already been shown that a home organization of industry is, in 
the strictest sense, the most economical; and there can be no 
doubt that, when a new country has raised its manufactures to 
an equality in efBciency with those of older countries, it will 

* On the contrary, the more manufacturers come into a country, producing a surplus 
of food, the more food the farmers can produce. 

+ Many of the cottons made in England for barbarian customers are so "sized " and 
otherwise adulterated that they lose one-fifth their weight in being washed once. 
According to Chambers' Encyclopedia shoddy enters largely into the best British 
woolen manufactures. 



568 ECONOMIC PHILOSOPHY. 

gain greatly by exchanging its agricultural products against its 
own manufactures, instead of sending them abroad. The whole 
question, then, is one of method; and the arguments, which those 
who call themselves free traders direct againsi this form of pro- 
tection, relate exclusively to the cost of the process it entails. 
Now, it is impossible for an unorganized industry, at any point of 
its progress, to attack an organized one without entailing loss and 
submitting to temporary disadvantage ; and if immediate advan- 
tage alone is to be consulted, the industry of such a country must 
remain forever unorganized.* Is it, then, to be held that the 
wisdom or energy of private enterprise, alone, is equal to making 
the sacrifices required for the common good; or is this a dogma 
of such elevation as to entitle those who hold it to lecture, as from 
a superior moral standpoint, the holders of a contrary opinion ? 

" I apprehend that a new country, in imposing protective du- 
ties in favor of native industry, is simply doing, by a common 
enterprise, what individuals, both in an old and a new country, 
do when they endeavor to organize an opposition to an estab- 
lished industry, t And there can be no doubt as to the adaptation 
of the means to the end." 

200. Devas on Protection. — The most valuable English 
chapter on protection is in Mr. C. S. Devas' ' ' Ground woi-k of 
Economics," sections 136 to 143. He says : " The argument in 
favor of free trade is based on two fundamental assumptions. 
The first is that each country, if laws do not interfere with its 
imports and exports, will produce that for which it is physically 
best fitted. But this assumption is often untrue, and for two rea- 
sons at least. First, a country may possess many natural ad- 
vantages (as coal beds, water-power, and water communications), 
which may remain unused, and the industries that might be 
founded on them remain unpracticed, because the costs of start- 
ing such enterprises are an insuperable barrier to their introduc- 
tion as long as the produce of other countries, who have the 
advantage of priority, can be introduced unhindered. New in- 
dustries, like new plants, may require shelter ; when acclimatized 
they may be found to grow even more vigorously in their new 
home than in their old, and the cost of their earlier years is well 
repaid. Till the workpeople are well educated to the work, and 

*i.e, the country must remain without a due balance of manufacture against 
agriculture. 

t i.e., they put up or sink capital, knowing thai, till loss is first sustained, gains cau 
not be made. 



INDUCEMENTS TO PROTECT. 569 

the technical minutife of the industry adapted to the special con- 
ditions of the country, there may be a heavy national loss, the 
produce being got at much greater cost than what it took to pro- 
duce the goods formerly exported in exchange for it. But these 
expenses, which would ruin any private enterpriser or private 
company, are, as it were, the expenses of a national apprentice- 
ship, and when once the machinery is brought into full working 
order, and the human agents are trained, it may be found that 
much more is got from this form of national industry than from 
the previous production of goods for exportation. Costs of trans- 
port are saved, and especially use is now made of the rich treas- 
ures of external nature, and the, perhaps, richer treasures of 
national- capacities and energies. To gain these advantages a 
protective tarifp is likely to be the best means, by enabling and 
inducing enterprisers to introduce the new industry, and distrib- 
uting the costs of the introduction as equably as well can be over 
the whole people.* Moreover, this temporary, tentative and ac- 
climatizing protection, is more than ever called for, in a time 
when the great development of means of transport has greatly 
lessened the former natural protection, afforded by remoteness, 
and when, also, the assimilation of local and national tastes to a 
cosmopolitan fashion has nigh levelled the protection afforded by 
a variety of tastes." t 

Mr. Devas then points out that protection, to the labor of one 
country, may also b6 made necessary by the oppression, slavery, 
or unnatural economic conditions prevailing in the country with 
whose labor it was obliged to compete ; also that a protective pol- 
acy may tend to nationalize and loyalize the more or less discord- 
ant elements of a nation, binding them together into a common 
interest and sentiment, and promoting industries which in any 

* "Blind free-traders" (says Roscher, "Principles of Political Economy," trans- 
lated by J. J. Lalor, New York, 18T8, vol. ii., pp. 432, 433) "always like to assume that 
every man capable of working always busies himself, whereas idleness frequently ex- 
cuses the wasting of its time by the plea that a remunerative market of the possible 
new products is improbable, or at least uncertain." 

t "Under such circumstances it would be possible that a whole nation might be 
made continually to act the part of an agricultural district (jjlattes-land) to one earlier 
developed, leaving to the latter almost exclusively the life of the city and of industry. 
A wisely conducted protective system might act as a preventive against this evil, the 
temporary sacrifices which such a system necessitates being justifiable where some of 
the factors of industrial production unquestionably exist, but remain unused, because 
others, on account of the mere posteriority of the nation, can not be built up." He 
justly reprobates the term hot-house plant being applied to industries fostered by tem- 
porary protection. (RoEcher, 1. c. ii., 437, 438.) 



570 ECONOMIC PHILOSOPHY. . 

way tend toward the unity or defense of the state, irrespective of 
their cost. He says : " Adam Smith urges that defense is much 
more important than opulence, approves the navigation laws, and 
does not condemn a bounty on the exportation of home-made sail- 
cloth and gunpowder ; moreover, it is generally admitted that, 
besides being independent of foreigners for the supply of muni- 
tions of war, the supply of food ought not to be such as to be 
liable to interruption in war, as when Athens could be starved 
into submission by closing the Bosphorus, while a free-trader, 
like McCulloch, extends this precaution to any important article, 
saying that ' nothing can be more injurious . . . to the real and 
lasting interests of any great nation than to have any considera- 
ble portion of its population dependent on the friendship or policy 
of foreigners.'* But free-traders are only not unpatriotic because 
they leave one of their first principles in the lurch. And being 
compelled by common sense to make the concession in regard to 
national safety, they can be logically forced to admit that sound 
political reasons may in any case forbid free trade." Protection, 
he argues, aids in securing a country against disrupting tenden- 
cies fostered by foreign influence — may tend to prevent emigra- 
tion and invite immigration — may help to so distribute and multi- 
ply occupations as to employ a much larger portion of the people 
in accordance with their tastes and capacities — may cause the 
food and clothing of the people to be made up and sold more hon- 
estly, as to quality, as artisans always deaP more honestly in a 
home than in a distant market, and faults and swindling are more 
easily corrected. Home production also causes greater evenness 
of prices and certainty of supply. 

' ' For in countries like Hungary, Egypt, and British India, 
with little accumulated wealth, if there is habitual exportation of 
grain, the superfluity of good harvests leaves the country, instead 
of being stored within it ; and when a bad harvest comes there is 
not sufficient wealth to attract from abroad a supply of food ; 
while even in the midst of a famine grain may continue to be ex- 
ported, as from Egypt in 1833, from Ireland in 1845-6, and from 
India, when millions were starving in 1877-8. Protective laws, 
by favoring home trade at the expense of foreign trade, may hin- 
der or mitigate such calamities. " t Finally, Devas indorses Carey's 
argument that protection may help prevent a wasteful exhaustion 

* Notes to " Wealth of Nations," xxv., p. 601. 
t Roscher, "Ackerbau," section 157, gives numerous instances. 



FOREIGN LABOR. 5 1 1 

of soils by inducing a more diversified system of culture and ro- 
tation of crops, which can only be practiced where markets are 
near. This applies also to exhaustion of forests, fish, mineral 
treasures, and all bulky raw materials. He concludes that " vio- 
lent denunciations of the one policy or the other as per se, and of 
necessity, foolish and mischievous, without any regard to the 
manifold diversities of period, people, and country, are out of 
place in the sober reasonings of science. Even to say that free 
trade should be the rule, protection the exception, or conversely, 
is more likely to mislead than elucidate ; and such a vague and 
general formula does not help us in the complicated discussion 
needed for each peculiar and actual case." 

201. Prof. Perry's Free Trade Methods— Does, or Does 
Not Free Trade Employ Foreign Labor ? — Prof. Arthur L. 
Perry's ' ' Elements of Political Economy " has had a success like 
that of debased coins, due as much to its alloy as to its value. 
It discards the inductive or statistical method, as does also Mr. 
Mill, and says : 

' ' It may be considered as a point already well settled by expe- 
rience that no man's sagacity is sufficient to guide himself or 
others to any sound conclusions on this field who takes his stand 
at the outset, amid the whirl of interlocking phenomena, and 
then endeavors to work himself out through the entangling 
meshes which surround him at every step. Happily, there is no 
need of any such procedure. Happily, man is man, motive is 
motive, and exchange is exchange, and the apparent chaos of 
commerce can be resolved through these alone into harmony and 
order." 

This is as if Descartes, in defending the assumption that 
planetary motion is due to a celestial ether moving in vortices, 
against Newton's theory of gi^avity, should charge Newton with 
taking his stand at the outset amid the whirl of interlocking phe- 
nomena, and should suggest that a much simpler solution of the 
problem lies in the fact that the earth is the earth, the sun is 
the sun, ether is ether, motion is motion, and vortices are vortices. 
The simplicity of such lines of proof is only apparent to minds 
that not only need no proof, but would not comprehend it if it 
were offered. 

In arguing that the importation of foreign goods, as compared 
with their production in this country, involves no loss to the 
national industry, Prof. Peny commits the same palpable over- 
sight which we have pointed out in Jevons, and this oversight 



572 ECONOMIC PHILOSOPHY. 

takes the place, with him, of both foresight and insight. He says 
(eleventh edition, pp. 396-7) : 

"Foreign articles are certainly wrought by foreign labor ; do we then byjbuying 
them employ foreign labor to the prejudice of our own laborers ? We are obliged to 
pay for every thing we buy — are we not ? In what do we pay ? Clearly, in the products 
of our own labor. We employ our own laborers to produce the articles we eschange 
for foreign articles. We pay for our imports by our exports. Our exports are created 
by home labor, and the only possible way for us to obtain the results of foreign toil is 
to offer in exchange the results of domestic toil. A commercial nation therefore not 
only does not, but it cannot, employ foreign labor. The more it buys of foreigners, the 
more home labor it must employ to create the articles with which it pays for what it 
buys, etc., etc," 

To employ American labor in creating the price, commodity, 
crop, or quid pro quo which we exchange for a product, employs 
only half as much American labor, as to employ American labor, 
in creating both, that with which we pay, and that which we pay 
it for. If, for instance, we raise corn to buy iron, he claims that 
we encoui'age American labor equally whether we buy foreign 
or American iron, because in either case we pay for it with the 
products of American labor. But, in the purchase of foreign u'on, 
only the price we pay represents American labor, while, in the 
purchase of American iron, both the price we pay, and the thing 
ive pay it for, represent and are the fruit of, American labor. 
Supposing that, in both cases, we get the worth of our corn in 
iron, in the case of the imported iron we give employment only 
to the American labor that produces the corn, while in the case 
of the American iron, we give employment to the same amount 
of American labor in producing the corn, and to an equal amount 
in addition., in producing the iron. 

This point having been stated very plainly by Adam Smith, 
both Jevons and Perry were bound to apprehend it in its true 
significance as an alternative between an importing policy, which 
it is admitted employs one capital and set of laborers, and a policy 
of home production, which employs two. The fact that neither 
Jevons nor Perry truly states the point, before assuming to con- 
trovert it, leaves the impression on the mind that they see that 
to state it is to make it incontrovertible on its face. Again 
Prof. Perry says on page 371 (eleventh edition) that the differ- 
ences which give rise to international trade are a ' ' diversity of 
original gifts, in climate, soil, natural productions, position, and 
opportunity," and an acquired "diversity of tastes, aptitudes, 
liabits, strength, intelligence, and skill." He then says : 

" It is on these diversities, original, traditional, anclacquired, that international com- 
merce depends ; it never would havecome intoexistence without them, and it would 
tcijse instantly and completely without them." 



THE ''NATURAL CONDITIONS" PLEA. 'ol'i 

So far as international commerce arises out of diversity of nat- 
ural conditions, as between a temperate climate and a tropical, or 
between a climate and soil like that of China, adapted to tea, or 
like Arabia and Brazil to coffee, px'otectionists say : " Off with 
all duties " — let these articles be free. Nor could any duty which 
could be placed on such articles be a protective duty, since there 
would be no domestic product to receive the protection. Hence, 
protectionists, in 1868 to 1870, were foremost in removing all 
duties from tea and coffee, and their principle requires them to 
strive to keep all duties off from troijical products, unless our 
territory extends far enough southward, as in the cases of sugai', 
oranges, and bananas, to admit of a portion of our people 
producing them. To these duties which protect nothing the free 
traders of the United States adhere, however, tenaciously, on the 
ground that they are, of all duties, the most purely for i-evenue 
only. Hence, Prof. Perry is inaccurate in claiming, as a free 
trade docti'ine, a reason for taking off duties, which only applies to 
cases wherein the free traders as a party, and Prof. Perry with 
the rest, want tlie duties to be high, while only the protectionists 
take them off altogether. The duties, which protectionists desire 
to maintain, and free traders to abolish, are those which rest on 
products coming from England, France, Germany, and Canada, 
between which countries and ourselves there is no natural diver, 
sity but only substantial identity of climate, soil, and other con 
ditions, and which produce, not.an unlike crop, or product, to offer 
in exchange for ours, but the same crop or product, to offer in 
competition with ours, to our own consumers. 

It is not true that a nation will cease instantly and completely 
to make iron, because another nation has richer mines, or more 
coal and lime, or could make the iron with less effort measured 
in days' work ; on the contrary, such first nation may never find 
it possible to begin to make iron, if every ton it turns out, 
though by a third less labor, is converted into a loss of money, 
by being met with a ton of foreign iron, which will undersell it 
by a tliii'd in money. 

By the report of Mr. Hewitt, American Commissioner to the 
Paris Exposition of 1867, on iron, it appears that as much iron 
could then be produced in Pennsylvania by one day's work as 
could be made in England by two, and in France by two days 
and a half. This settles conclusively the fact that all natural 
and acquired diversities favoring the production of iron were even 
then two to one in our favor, for we could produce iron by one- 



574 ECONOMIC PHILOSOPHY. 

half the effort that the English could, and by two-fifths of that 
expended by the French. But whether from such a division of the 
price of the iron, between the British iron-master and his work- 
men, that the latter got less than half the proportion paid to the 
American workmen, or other cause, the English iron-master did 
produce iron at twice the actual cost, in effort, and still sold it 
at a less money cost than the American producer. 

As Mr. Devas truly poiiits out, if the "diversity" on which a 
competitor depends for his ability to undersell us, is a disinher- 
ited and paupei-ized proletariat of starved workmen, undergoing 
eviction from their homes and exile from their country, is it not 
wiser in the interests of the whole human race to attract these 
pauperized workmen to the United States, where by one-half the 
expenditure of effort required in England, he can make as much 
iron as there, and get for himself a larger proportion of the cost 
of production as wages ? 

202. Why Canadians may Not have Free Trade with 
Vermont. — Prof. Perry asks (p. 396, eleventh edition) the fol- 
lowing question : 

" The south, end of Vermont trades freely and advantageously with its neighbors 
across the line iu Massachusetts ; is there any good reason why the north end of Ver- 
mont should not trade just as freely and advantageously with its neighbors across the 
line in Canada ? " 

If Prof. Perry were asked why he did not teach political econ 
omy in Timbuctoo, where the mental darkness is very great, in- 
stead of in Massachusetts, where there is relatively almost a sur- 
plus of education, it might be difficult to compress, into one 
sentence, all the answers to so revolutionary an inquiry. But a 
first and sufficient answer might be, that the regents of the uni- 
versities of Timbuctoo had not invited him ; secondly, that Tim- 
buctoo had no universities or regents ; and, thirdly, that, as Tim- 
buctoo does not protect its industries in any way, it had reached 
that acme of political wisdpm, in which to export a Prof. Perry 
to it would be like carrying coals to Newcastle. So, in answer to 
Prof. Perry's question, it may be said: first, that the American 
tariff is designed to give American producers a first chance at 
American markets, and the Canadians, never having intention- 
ally contributed toward the cost of maintaining American insti- 
tutions, are not entitled to share in that first chance; secondly, 
that, as the Canadians and Vermonters both produce the same 
crops, they could have no motive to sell to each other; and hence, 
that the goods which would in fact ci-oss the line would be En- 



HOME UNITIES VS. FOREIGN FREEDOMS. 575 

glisli manufactures from Manchester, Birmingham, and Sheffield, 
seeking to undermine the American manufacturers in New 
Hampsliire, Massachusetts, and Connecticut. 

The people of the New England States have certain financial 
interests in common in which Canadians do not participate, and, 
on the other hand, Canadians have interests in common as 
members of one national family. While these interests relate 
primarily to government, education, mutual national co-operation 
and defence in war, yet they relate in many ways to trade, 
money, especially paper money, banks, bankruptcies, transporta- 
tion, and other matters afi'eeting business. 

When a man has married a wife, and becomes the head of a 
family of his own, the closer relationship which thus binds him 
to his wife and daughters precludes the dignity and propriety of 
his receiving services from, and rendering attentions to, the wives 
and daughters of his neighbors, merely on the ground that, in a 
single transaction, it might be shown to be cheaper. The business 
life of two nations, like the social life of two families, is not a mere 
isolated transaction, but is a continuous national career, the dignity 
and utility of which requires that its several parts shall suri'ender 
some hypothetical freedom for tiie perfecting of the higher unities 
which ensue. The Vermonters and Canadians produce substan- 
tially the same products, viz. : lumber, grains, meats, potatoes, 
wool, hay, butter, and cheese. If Canadians were permitted, 
therefore, to trade free with Vermonters, it would not be with 
them that they would trade, but they would compete with them 
in selling the above products to the manufacturing, artisan, and 
exchanging populations, of New England and New York. As 
competitors, seeking to undersell the "Vermonters, let us see 
whether the international boundary line does not mark a very 
great difference of conditions. The present value of the New 
England markets, to a farmer, grows largely out of the vigor of 
their manufactures, and the great number of persons dwelling in 
New England who are not engaged in farming. To secure these 
large manufactures, the Union had to be preserved from dissolu- 
tion at a cost of many millions of dollars, and many antecedent 
losses and failures in business had to be undergone, in none of 
which Canada had any part. These manufactures are in pai't the 
product of patent laws, and in part of protective tarift' laws, and 
in part of state aid, and in part of corporate and individual enter- 
prise, and in part of state legislation, state education, and other 
state and national expenses, in which Canada has no share. From 



\1Q 



ECONOMIC PHILOSOPET. 



1861 to 1873 the Vermonters paid their share of a national, state, 
and local taxation which amounted to about $850,000,000 a year, 
or $21.25 per capita for 40,000,000 people. As the head of a fam- 
ily at the average supports seven persons, this amounted for such 
an one to $150 a year. The Canadians, during- the same period, 
were part of a nation of 3,693,461 inhabitants, who paid in taxes 
£3,534,760 per year, or about $4.50 per capita, or for a head of a 
family of seven persons about $31. For twenty years, the Ver- 
monters were paying about fourteen per cent, of their earnings 
in taxes, while the Canadians were paying 3.1 per cent. Hence 
a tax of eleven per cent, on the proceeds of any sales, made by 
Canadians in this country, would have to be laid, to neutralize the 
lower rate of taxation prevailing for so long a period in 
Canada. 

203. The Profit Arguinent : Protection Profits a 
Nation or Nations Would Not Protect. — Prof. Perry 
makes a supposed argument for free trade because trade is profit- 
able to the individual, which applies equally in favor of protec- 
tion, provided it be true, as all protectionists believe, that pi'otec- 
tion is profitable to the aggregate of individuals constituting the 
nation. The two parallel arguments would run thus : 



PEKRY FOR FREE TRADE. 



Men do not engage in foreign trade for 
fun. 

They engage in it for the sake of the mu- 
tual gain desirable by both parties. 

They desist from it as soon as that mu- 
tual gain disappears. 



And there is no mutual gain in any series 
of exchanges unless each party has a supe- 
rior power in producing that which is ren- 
dered compared with his power in produc- 
ing that which is received. 



We will suppose a trade between En- 
gland and France in cottons and silks. 



England sending cottons to France and 
France sending silks in return. 



When and how long will this be a profit- 
able trade y 



THE SAME LOGIC TRANSFERRED 
TO PROTECTION. 

Nations do not enact protective tariffs 
for fun. 

They lay protective duties for the sake 
of the increas^fcd general prosperity it im- 
parts to all their people. 

They desist from it as soon as there are 
no longer any industries whose expansion 
by its means Avould promote the general 
prosperity. 

And there is no national gain in anj^ pro- 
tective tariff unless the state levying it has 
such natural resources for producing the 
article it professes to prot-ect that the en- 
tire cost of bringing it into a state of profit- 
able production will be far exceeded Ijy the 
profits of its production. 

We will suppose a rivalry between En- 
gland and America in the manufacture of 
clothing. 

England desiring the profits of making 
American clothina;, and Americans prefer- 
ring to make tliese profits themselves, by 
the aid of a protective tariff. 

When and how can these profits be prof- 
itably transferred to American producers f 



PROTECTION PROFITS. 



577 



PEERY FOR FREE TRADE. 



Then when efforts bestowed in France 
upon silks will procure through exchanaje 
with Entjhuid more of cottons ihan the 
eame amount of efEort bestowed in Prance 
upon cottons will produce of cottons 
directly. 



And then when efforts bestowed upon 
cottons in England will procure more of 
silks than the same amount of efforts be- 
stowed in England upon silks will produce 
of silks directly. 



THE SAME LOGIC TRANSFERRED 
TO PROTECTION. 

Then when American producers of cloth- 
ing, through the stimulus imparted to their 
efforts by the assured control of at least the 
American market, have so brought the ar- 
tificial facilities of production, such as di- 
mensions, division of labor, capital, ma- 
chinery, skill, aud credit, alongside of the 
natural resources which they had at ihe 
start, that they are superior in both, for 
when this happens they will excel their 
competitors in quality of poods, dispatch 
in turning them out, credits in selling 
them, and cheapness. 

And then when efforts bestowed upon 
transferring the place of production from 
England to America through protection re- 
sult in a more abundant and cheaper pro- 
duction per capita in America than the 
same amount of effort bestowed on the ex- 
pansion of the production of clothing in 
England would have produced of abun- 
dance and cheapness in America. 

It is not true in fact that the exchange of commodities is neces- 
sarily profitable to either party, any more than it is true that pro- 
duction or legislation is necessarily profitable. People may make 
trades in which both parties lose, or in which one loses and the 
other gains, or in which they both gain. Legislation itself is an 
exchange, in one form. It is the exchange, or trade, of the old law 
for the new one. Hence, to assert that all exchanges are profit- 
able, would include that all laws are profitable, and hence that 
protective laws are profitable. We use these illustrations, merely, 
to point out that plausible phrases must not be mistaken for sub- 
stantial proofs. 

Prof. Perry seems honestly to believe that when he has once 
established that international traders trade at a mutual profit, 
and not at a loss to each other, the doom of protection is sealed. 
He elaborates, with painful assiduity, his demon stratioti that 
traders trade at a profit, ergo no taxes should be collected on im- 
ported goods ! It is difficult to doubt that such financiers and 
publicists as Colbert, Napoleon, Bismarck, Beaconsfield, Von 
Beust, Thiers, Mazzini, Alexander Hamilton, and even Clay, 
Webster, Lincoln, and Dr. Henry C. Cax'ey himself, are compe- 
tent to suspect that traders often trade at a profit. If so simple a 
clue as this could solve the question, the tariff question would 
come in just after mumble-peg, or marbles. 

All industries are unprofitable at the beginning, in proportion 
to their complexity and ultimate value. When the first glass bot- 
tle was made in Pittsburg, its maker, O'Hara, charged its cost on 



678 EQOmmtG PHtLOSOPHT. 

his books at $30,000. But the second glass bottle cost but a 
cent. Now, if O'Hara had known that the science of society con- 
sists in profitable swapping, instead of introducing a new in- 
dustry, he could have learned from Prof. Perry where he could 
get his first glass bottle cheaper, by $29,999.99, than by mak- 
ing it. 

There was a time when the French could not make silks in 
competition with Genoa, France would never have begun to 
make silks, had she not removed by her tariff the disadvantage 
and loss her people would incur, until their works acquired the 
dimensions to rival the Italians. The moi'e complicated the con- 
ditions of success in production, the greater the loss by the first 
swap of the old industry for the new. A farmer who sends his 
boy to school loses the value of his labor for the time, and submits 
to a tax for his tuition, in the hope that he may be a better and 
more rapid and skillful producer, through the knowledge he will 
there acquire. All shrewd business is a wise sinking of present 
advantage for a far greater future gain. Why may not a city, 
state, nation, take this course as well as an individual ? Prof. 
Perry might have explained to the New Yorkers, that the fl.rst 
glass of pure water they could get from the Croton River would 
cost them $10,000,000, while they could get it elsewhei'e at two 
cents a glass. But they did not hesitate to tax themselves heavily, 
to bring water by aqueducts, to build docks for ships, to pave and 
light the streets, to lay out parks for the amusement of the people 
— in short, to do any and every thing, which could attract resi- 
dents to New York, and make business thrive. According to 
Perry's barren doctrine, they should have confhied the duties of 
government to simply keeping the peace. But why keep the 
peace, thus discriminating agaiiast those who would break it ? And 
how can peace exist when work can not be had ? Suppose that 
at]present the country could raise the wheat, cotton, and petroleum 
to pay for 500,000 tons of foreign bar iron per 3'ear, with less labor 
than they could produce the bar iron. That forms no reason why 
we should not strive to place ourselves in a position to make the 
iron next year cheaper than we can impoi't it. As we have 
already quoted, the same amount of effort or labor which, in 
England will make one ton of pig iron, will here make two 
tons. If half the iron-workers in England, therefore, could be 
set at work here, they would produce as much as the whole 
now do. As their places would be supplied from the sur- 
plus and unemployed English paupers, the tendency would be 



WHEI^ TAKING MORE LEAV£!S MORE. 579 

to add to our product tlie whole product of England, and 
leave her product unimpaired. Three-fourths of the cost of 
iron consists of agricultural products, raw or manufactured. 
American iron represents our own crops consumed by laborers 
in making it. English iron represents mainly European crops. 
Hence the increase of our bar iron manufacture by 500,000 
tons, worth, say, $35,000,000, would not only furnish American 
farmers with a market for the crops which pay for this iron, but 
also for the crops consumed in making the iron, which are as 
much more. In other words, if we buy $35,000,000 of bar iron 
from England, we export products of the farm and plantation, 
and so find a market for $35,000,000 worth of crops. But if we 
buy the same amount of American iron we find a market, first 
for the $35,000,000 required to pay for the iron, and, in addition, 
for $31,000,000, or thereabouts, of American crops consumed in 
making the iron. 

204. Cost of Labor in America and Europe. — In 
all research we are certain to arrive at false conclusions, if we 
adopt our theory first and insist that facts shall agree with it. 
In the following statement of the relative dearness of labor in this 
country compared with its cost in Europe, Prof. Perry is misled 
by a too trustful confidence in, and misapplication of, olie of 
Ricardo's half-truths. He says (p. 422) : 

" The cost of labor must be lower in this country than in Europe, because the rate 
per cent, of capital is higher. Labor and capital alone conspire in production. Profits 
are the leavings of the cost of labor. If, therefore, on every hundred invested the 
rate of profit is higher, the conclusion is unavoidable that the cost of labor i8 lower." 

This assumes that the ratio of the joint product of labor and 
capital, to the principal invested, and the effort made, is the same 
in Europe as here, whereas it is four times greater here than 
there. If $1,000, and 1000 days' works combined, earn four 
times more here than in Europe, capital would get higher 
interest here, without its following that labor would get lower 
wages. On the contrary, if capital got only a two-fold higher 
interest, labor might get a six-fold higher wage. Thus, if the 
two combined earn $10,000 here in a given period, and only 
$3,000 in tlfe same period in Europe, and in Europe wages 
might take $1,000, and here $6,000, its leavings for capital 
would still be $4,000 hei-e, against $2,000 in Europe. After pay- 
ing six times as high wages, it might still pay a two-fold higher 
interest. 

No schedule of relative wages here, and in Europe, would 



580 ECONOMIC PHILOSOPHY. 

sustain Prof. Perry's error. He plainly does not mean by " cost 
of labor " the cost of machine labor, or of x^roduction, but of 
human labor time. The four hundred thousand emigrants 
coming fi-om Europe to this country every year are the best 
proof that wages are higher, relatively to cost of living, here 
than there. On the next page he says : 

" Our bureau of statistics gives tlie wages of fourteen classes of operatives in woolen 
mills in England, and the corresponding wages here reduced to gold. Our average is 
only 21.89 per cent, liigher than theirs." 

This would seem to refute his previous position that the cost 
of labor is less here than in Europe. But doubtless in Prof. 
Perry's view the proof that American labor costs only 21.89 per 
cent, more than that of Europe, fully sustains his own statement 
that it costs less! Prof. Perry may even, so differently are we 
constituted, regard a statistic showing that wages are 22 per cent, 
higher in America than in Europe, as proof that the cost of labor 
is 22 per cent, lower, since capital must get more here or it would 
not pay such high wages, and if capital gets more — Presto — labor 
must get less ! One could as well reverse the proposition and 
prove that our rates of interest are lower by assuming that our 
wages are higher. If capital and labor can earn in conjunction 
about twice as much here as in England, because of the greater 
general productiveness of industry, they will have twice as much 
product to divide, both will get twice as much — the one in wages 
and the other in interest. Assuming that the rates of wages 
in certain industries are only 21.89 per cent, higher here than 
in England, that would render a tariff of 21.89 per cent, on 
the importation of the product of that labor from Eng- 
land, necessary in Order to place the producers of the same 
product here in a position to compete on equal terms with 
those in England. How much more shall we allow for dif- 
ference in rates of interest on capital, and for our more burden- 
some taxation to pay off the public debt ? These three causes 
together would be very likely to make a difference of 35 per 
cent., to which extent our tariff of duties on imports would 
be merely a compensation for difference in rates of wages and 
capital. 

In 1868-9 the following were the relative rates of wages in 
nineteen principal industries in the United States, and in two of 
the counti'ies with which our manufacturers principally com- 
pete, both in our home and foreign markets : 



Great 


United 


Britain. 


States. 


$3 87 


$5 25 


5 20 


7 60 


5 14 


7 13 


5 85 


9 85 


7 83 


8 70 


8 30 


13 17 


5 46 


9 88 


6 30 


9 43 


7 00 


11 10 


6 75 


13 76 


8 17 


13 63 


7 85 


12 00 


6 88 


10 58 


5 50 


9 83 


7 62 


10 37 


6 60 


13 40 


4 84 


9 00 


6 16 


11 70 


6 70 


10 00 



AMERICAN WAGES. 581 



Branch of Industry. Prussia. 

Cotton mills $2 88 

Woolen mills 2 52 

Worsted mills 2 40 

Sugar refineries 

Iron rolling mills 4 03 

Steel works 3 60 

Machine shops 3 90 

Hardware, man 3 00 

Edge tools, man 3 02 

Agricultural, implements, man 5 24 

Firearms, man 4 39 

Saw, man 3 60 

Gas works 

Leather, man 3 35 

Glass works, man 2 74 

Silk hat, man 

Paper mills 2 50 

Wood shipbuilding 

Iron shipbuilding 

The following were at the same period the relative rates of 
weekly earnings paid to the puddlers : 

United states $16 54 gold. 

England 8 75 " 

France 8 00 " 

Belgium and Rhenish Prussia 6 00 " 

Russia (Vicksa Ironworks) 193 " 

In the Western Association of Iron-makers, including those of 
western Pennsylvania, the wages are graduated according to the 
price obtained for the product. It would, perhaiJS, be a still 
further advance from dividing according to price, to divide 
according to profits. 

Tliese rates may be supposed to have been influenced by the 
conditions incident to recent war. The Canadian Manufacturer 
condenses as follows the annual report of the Massachusetts 
Bureau of Labor, upon the relative condition of working-men 
in Great Britain and Massachusetts, in 1883. The inquiry was 
exhaustive. 

The comparison is based on pay-rolls obtained from two hun- 
dred and ten establishments in the State, and one hundred and 
ten in Great Britain, to obtain which thirty-two towns and cities 
in tlie former, and twenty-six in the latter, were visited. The 
industries covered by this special comparison for 1883, and for 
which statistics were gathered during the last four months of the 
year, involved 74.9 per cent, of the total products of the manu- 
facturing industries of Massachusetts. The general result of the 
inquiry appears in the following table of the average weekly 
wages paid employees : 



682 WONOMIG PHILOSOPHY. 

Great 
Industries. Massachusetts. Britain. 

Agricultural implements $10 25 $8 85 

Artisans' tools 11 80 4 89 

Boots and shoes 11 63 4 37 

Brick 8 63 4 16 

Building trade 14 99 7 21 

Carpetings 6 08 4 11 

Carria2;es and wagons 13 80 4 89 

Clothing 10 01 6 71 

Cotton goods 6 45 4 63 

Flax and jute goods 6 46 2 84 

Food preparations 9 81 2 72 

Furniture 11 04 7 96 

Glass 12 28 6 94 

Hats (fur, wool, and silk) 11 01 5 51 

Hosiery 6 49 4 67 

Liquors (malt and distilled) 12 87 12 66 

Machines and machinery 11 75 6 93 

Metals and metallic goods 11 25 7 40 

Printing and publishing 11 37 5 52 

Printing, dyeing, bleaching, and finishing 

cotton textiles 8 67 4 94 

Stone 14 39 8 68 

Wooden goods 12 19 5 67 

Woolen goods 6 90 4 86 

Worsted goods 7 32 3 60 

All industries, Massachusetts, $10.31; Great Britain, $5.86. 

The statistical tables show not only this general advantage to 
all wage-earners in the protected country, irrespective of age or 
sex, but afford a means of arriving at the ratio of wages paid 
women, young persons, and children to those paid to men. 
Taking the average wages paid to men as 100, in Massachusetts 
the ratio of those paid to women is as 51.39 to 100 (that is, the 
average wages of women are a little more tlian one-lialf as much 
as tliose paid to men), those paid to young persons 43.04 to 100, 
and those paid to children 32.15 to 100. In Great Britain the 
ratio for women is 40.92 (men's wages considered as the unit, 
or 100), for young persons 29.6 to 100, and for children 9.56 to 100. 
In Massachusetts, on the average, one woman, young person, and 
one child working together, would earn as much combined as 
1.26 men ; in Great Britain they could only earn .79 as much as 
a man, or 59.4 per cent, in favor of the women, young persons 
and children of Massachusetts. There is in Great Britain no 
branch of industry of those considered, in which men are 
employed, in which the prevailing average weekly wage rises 
above $20, while in Massachusetts, in eight per cent, of the occu- 
pations, the average weekly wage exceeds that figure, reaching 



WENDELL PHLLLIP8 ON WAGES. 583 

$40, or double the highest average weekly wage in Great Britain. 
In Great Britain there is no branch of these industries in which 
women ai'e paid more than $6 per week on the average, while in 
Massachusetts, in 53 per cent, of the various occupations or 
branches of iudustrj^, the average weekly wages exceeds |6 per 
week, reaching as high as $19, or more than three times the 
highest occupation average for Great Britain. In Great Britain 
$6 is the highest occupation average, for young persons in these 
industries ; the occupation average in Massachusetts reaches to 
$11, or nearly double the Great Britain highest occupation 
average for young persons. In the case of children, the highest 
occupation average, in the industries considered for Great Biitain, 
is $2, while in Massachusetts, in 98 per cent, of the branches of 
these industries in which children are employed, the range is 
higher, reaching $7 in a small percentage of the occupations. 

On the other hand, the cost of living is somewhat higher in 
Massachusetts than in Great Britain, the exact difference being 
17i per cent. , of which Hi per cent, arises out of the one item of 
rent. The question of expense is insignificant compared with 
that of wages, which under protection, by a close and careful 
test, are shown to average nearly double, in Massachusetts, those 
prevailing in Great Britain. 
Says Wendell Phillips : 

" Putting aside all theories, every lover of progress must see, 
with profound regret, the introduction here of any element which 
will lessen wages. The mainspring of our progress is high wages 
— wages at such a level that the working-man can spare his wife 
to pi'eside over a 'home,' can command leisui-e, go to lectures, 
take a newspaper, and lift himself from the deadening level of 
mere toil. That dollar left after all the bills are paid on Saturday 
night means education, independence, self-respect, manhood ; it 
increases the value of every acre near by, fills the town with 
dwellings, opens public libraries, and crowds them, dots the 
continent with cities, and cobwebs it with railways. The one 
remaining dollar insures progress, and guai*antees millions to its 
owner, better than a score of statutes. It is worth more than a 
thousand colleges, and makes armies and police superfluous." 

The freedom of the working classes may be secured by the bal- 
lot and laws, but it is created by and is proportionate to wages. 
Low prices for the products of labor (machinery, and other facil- 
ities of pi'oduction being equal) mean low prices for labor itself, 
for no employer can pay high wages to his workmen and sell the 



584 ECONOMIC PHILOSOPHT. 

products of their work at as low prices as one who pays half wages, 
unless he does so by having more machinery, cheaper tools, a 
larger capital, or force, or some other facility which the employer 
at low wages can not equally command. , 

In the case of the American farmers paying higher wages than 
the English, yet underselling the English in wheat, beef, and 
pork, the struggle is really not in the main between the two classes 
of laborers, but between cheaper land and machinery on one 
side and dearer on the other. Nor is it possible for the American 
manufacturer to have at present as cheap capital, or more or 
cheaper machinery, than his English rival in most industries. 
In some occupations, however, as shoemaking, watchmaking, 
and farming, the Amei-ican workman has cheaper machinery, 
and makes a larger use of it. Freights on American railroads 
are about one-third the English rates per ton per mile. 

205. Making- Taxes Productive. — Prof. Perry says (page 
389): 

" How anybody can intelligently suppose that a system of taxes can be bo cunningly 
adjusted as to become a positive productive age^it, a spur to theprogr<^ss of society, 
they must explain w-lio suppose so. I myself once supposed so. But it was wheni 
was in ignorance of the real nature and operation of such taxes." 

Prof. Perry could not have produced the book in which he 
denies that taxation can produce anything, except by taxing hig 
intellectual energies. A slightly larger per cent, of taxation 
would bring its views into harmony with the interests of society 
and the exigencies of statesmanship. He has advised, however, 
a system which would do, if a state needed no revenue, and a 
nation no unity. The farmer taxes himself severely to raise his 
crops, the parent to support his family. Society is everywhere 
sustained by mutual taxation. Most colleges are the product of 
self-imj)osed taxes, laid either on the rich by themselves while 
living, or by the dying on their heirs, or by the state on the tax- 
payers. Society itself is a network of reciprocal taxation, levied 
to effect a network of reciprocal service. 

Taxes, when collected, are in the hands of the government 
capital with which they may promote production in ways more 
effective than individual capital could ever do. The taxes that 
open and improve our roads, pave our streets (in cities), build our 
piers, dig our Erie canals, bring water into our cities, educate our 
children in common schools, clear our rivers for navigation, and 
so on, are laid solely to promote production ? "Why should capital 
lose its fructifying and productive power when it passes into the 



" TAXES" THAT ENEIGE. 585 

hands of the state ? Since capital is useful only in commanding 
the services and energies of our fellow-men, and taxation is a 
mode of commanding these very services and enei'gies, why is not 
the power to tax, itself, a form of capital, and therefore fruitful ? 

If, as we have said, the average rates of wages paid in 18G8 to 
1873 were, in fourteen different manufacturing industries, twenty- 
two per cent, higher here than in England, and if rates of earn- 
ings for capital employed in conjunction with labor averaged 
fifteen per cent higher, and if our taxation, national and state, 
made a fui'ther difference of five per cent, more in cost of ]5roduc- 
tion, then it would follow that in all kinds of production which 
England could carry on with the same expenditure of effort as our- 
selves, our price would need to be forty-two per cent, higher 
than the English price. Otherwise we would be absolutely ex- 
cluded from carrying on all those kinds of business which we could 
conduct with the same expenditure of effort as the English. 
We should have been also excluded from all such kinds of 
business as would demand of them less than forty-two per cent, 
more of effort than they demanded of us. This would have dis- 
chai'ged several millions of our wages-working class. But just 
here comes iii the oppoi'tunity to make taxes promotive, or at least 
defensive, of production. We levied twenty to sixty per cent, 
duties on such articles as competed with our own industries, and 
what was the result ? We continued, at a profit, the production 
of all products which we could produce with the same expendi- 
ture of effort as our foreign competitors. We sustained our 
rates of wages, and yet diversified our industry, by defending all 
branches of production which we had equal natural powers with 
other countries for carrying on. 

206. Collecting Taxes from Foreign Producers.— But 
this was not all. The schedule "^ consists of articles the duties on 
which, in 1870, were paid entirely, or substantially, by foreignei's. 
There were others in whicla foreigners paid a portion, greater 
or less. On these they paid the wliole duty. A careful study 
of the table may show that it is, after all, possible, not only 
to devise a system of taxes which will be a productive agent, 
but which will be an economy instead of a burden to the 
taxpayers. 

Of each of these articles, we produce from fifty to a thousand 
times as much as we import. Which of them will Prof. Perry 

* The following is a table of articles, the price of whicli is fixed wholly by American 



586 



ECONOMIC PHILOSOPHY. 



take as a test, and say that the duty is added to the selling price 
of the whole quantity consumed, whether imported or produced 
here ? If he says this of butter, our farmers would smile to learn 
that Congress can, by a mere act of legislation, raise the price 
of all the butter consumed in the country by four cents a 
pound. So of all other articles. The duties on these are $19,- 
000,000. This is a very moderate part of the total revenue paid 
by foreigners under our protective system. It aims to include 
none pf the cases in which foreigners pay part of our revenue 
and American consumers pay the balance. In the cases of 
all ai'ticles in which competition between the foreign and Amer- 



production, and consequently the duties on which are paid wholly by foreign pro- 
ducers : 

IMPOETATIONS FOR THE YEAR ENDING JUNE 30, 1870. 



Commodities. 


Quantities. 


Values. 


Rate of Duty. 


Amount of 
Revenue. 


Butter fts 


4,089,098 




4c. ^ fl> 

20 ^ cent 


$168,563 

12 874 


Brick 


$64,374 


Candles, lbs — 
Star, stearine 


6.824 

10;754 

2,289,257 

21,568 

415,728 

701,323 


.5c. ^ lb 


362 


Parafflne, sperm. . 


8c. ^ B) 


860 


Cheese, ttis 


46', 479'" 

184,542 


4c. ^1? ft 


91,570 




5c. %^ ft 

$1.25 ^ ton 


1,078 
519,661 


Coal, tons 


Copper ore 


3c. ^ ft 


22,839 

9,349 

36,913 

1,718,051 

1,367,261 

8,400 




20 lucent 

20 ^ cent 

2c. 1? ft 

30 ^ cent 

Ic ^ ft 


Glue 




Lead, lbs 


80,916,724 




4,554,260 


Beef and Pork 


840,074 
138,599 

129.557"' 

6,228,285 


Bacon, hhds 




2c <g ft 


2 771 


Effgs, yolks of. .. . 

Linseed oil, gals 

White Lead, ttis.... 
Paper-- 


410,416 

69,021 
145,743 


10 ^ cent 

23c. ^gal 

3c. ^9 ft 

20 ^ cent .-. 

35 ^ cent 

25c ^ bu 


41.046 
29,798 
186,846 

13,804 
51,090 


Writing 




Potatoes, l)u .. 


88,978 

30,0.37,640 

569,658,703 

33,693 

19,956 

525,726 

263,819 


22,244 


Rice, lbs 


2}^c ^ ft 

18 and 24c. ^ lOOfts.... 

Ic. ^ ft 

2c. ^ ft 

$2.50 ^9 ft and 25 ^ cent 

lOc. ^ gal. . 

20 ^ cent 


755,503 

1,198,552 

336 

339 


Tallow, tt(S 

Lard, lbs 


'l,'69'o',477" ' 

'227'. 788" 
805.881 
6,660,156 

6,382,078 

455,987 

3,028,361 

290'967' 






1,737,533 


Vinegar, gals 


26,405 
45,604 
282.113 






35 f? cent 

20 ^ cent 






1,334,751 
2.233 741 


Clothing — 




25^ tent 

60 f( cent 

50c. 1? ft and 40 ^ cent 

$9 |3 ton 

20c. %1 bu 

20 per cent 

15c. perbnsh 

10c. per bush 

10c. per bush 

10c. per ft, and 11 per ct. 


Silk 




273,592 


Wool . . 




1.762,806 


Pig Iron, tons 

Wheat, bu 


179,848 

509,724 

63,939 

6,725,496 

2,131.690 

89,005 

5,430,322 


1,618,632 
101,944 
58.181 


Barley, bu 

Oats, bu 


1 008,824 

213,169 

8.900 


Wool, raw 


2.228,840 



Total $19,189,358 



MILL ON TARIFFS. 587 

ican producer is made active by the advances of the latter toward 
supplying a j)roduct which the former has previously supplied, 
the foreign producer pays part of the revenue in order to hold 
his market. Such are the cases of bar iron, imported hardwai'e, 
cotton, and woolen cloths. The proportion of duties paid by 
foreigners on these, at present, has never been officially inves- 
tigated. We judge it to be from a third to half of the duty. In 
that case, about forty millions ($40,000,000) of our tariff revenue 
are paid by foreign producers, John Stuart Mill concedes this 
capacity of a tariff on competing products, to collect revenue from 
foreigners. Mr. Perry, by ignoring, virtually denies it. On the 
conti'ary, he denounces those particular duties as "robbery of the 
American taxpayer," which are not paid by the Americans at all, 
but are a, net gain to themi as taxpayers. We correct Perry by 
the more judicious candor of Mill, in this regard. In vol. ii. 
page 457, of his "Principles of Political Economy," he says : 
' ' Those are therefore in the right who maintain that taxes on 
imports ai'e partly paid by foreigners. " And again, on page 458, 
he says concerning ' ' duties not sufficiently high to counter- 
balance the difference of expense between the production of the 
article at home and its importation" : "Of the money which is 
brought into the treasury oTF any country by taxes of this last 
description, a part only is paid by people of that country, the re- 
mainder by the foreign consumers of their goods." And again 
he says (same page) "a non -protecting duty would, in most 
cases, be a source of gain to the country imposing it, in so far as 
throwing part of the weight of its taxes upon other people is a 
gain." And again, " the only mode in which a country can save 
itself from being a loser, by the revenue duties imposed by other 
countries on its commodities, is to impose corresponding revenue 
duties on theirs." 

The entu-e $123,000,000 of duties on the imports of 1867, which 
we have above classed as " protective, " were, according to Mr. 
Mill, revenue duties. They were not so high as to '' counter- 
balance the diffei'ence of expense between the production of the 
article at home and its importation." If they had been, the 
articles, on which the duty has been actually collected, would 
not have been imported. Hence, that duties were collected upon 
them proves that the duty was not high enough to prevent their 
importation. Hence, they were revenue duties. Hence, a part 
of them was paid by foreign manufacturers and merchants. 
It is easy to pei'ceive the inducement which leads a foi-eign manvi- 



588 EGONOMIG PHILOSOPHY. 

facturer or producer, in certain states of the market and of prices, 
to pay the duty himself. He cannot always know, when he pays 
the duty, at what price he can sell the goods. He is as liable, 
therefore, to lose the duty as he is to lose any other element of 
cost. As he can not be sure his price will cover wages, rent, or 
interest, neither can he know it will cover duties. 

A manufacturer in Sheffield, England, makes cutlery, and 
has usually shipped to America knives which cost him $4 a dozen, 
to be sold at $6 a dozen, whereby he controls the market, as the 
American manufacturer can not make them less than $7. A duty 
of $3 a dozen is laid on them. He says: " Now, I can not sell 
these knives for more than $7.50 a dozen, for at that price the 
Americans can make the same knives at a profit, and if I 
sell at $8, they will cut me out of the trade altogether. I will 
therefore pay the duty of $3 a dozen myself, sell them at |7.50, 
and have fifty cents profit, instead of selling them at $6, Avith $2 
profit, as I did before the Ainerican duty was imposed." The 
effect, therefore, is: 

1. The price of the knives to the American consurner is not 
raised, by the amount of the duty, |3, as many free traders would 
say, but by only $1.50. 

2. The amount of the duty is not charged over by the importer 
on the consumer, as the free traders assume, and paid by the 
American purchaser of knives. It is paid one-half thereof out 
of his previous profits, of which it absorbs three-fourths, by the 
British manufacturer, and one-half thereof out of the rise in 
price, which latter — one-half of the duty only — is paid by the 
American consumer. 

3. Though the price of the article is raised by $1.50, yet, had the 
tax been levied in any other manner whatever, the price of what- 
ever it was levied upon must have been raised $3. American 
consumers, therefore, have not only got rid of $1. 50 of tax, by col- 
lecting it out of their British cousins, but have avoided $1.50 of 
the rise in price, which would have resulted somewhere else, and 
on something else, if they had levied the tax where Americans 
would have to pay the whole of it. 

4. American manufacturers, who had previously been under-, 
sold by $1 a dozen on knives, now find they can make them at a 
cost of $7 a dozen, to start with, and make a profit of fifty cents a 
dozen. But as they go on, and their skill, organization, and 
capital increase, they constantly tend to produce them more 
cheaply, until, at last, they can produce them at $6, $5, or $4 a, 



ADDING DUTY TO PRICE. 589 

dozen, and the foreign manufacturer is finally and forever under- 
sold, and driven out of the field.* 

207. Whether the Duty Raises the Price on the 
Whole Domestic Product. — Prof. Perry seizes upon the class 
of articles which are almost wholly produced in this country, and 
in which, therefore, the tariif is \\\ most cases nearly or quite 
powerless to affect the price, as being those in which it operates 
on the largest scale as a tax on consumers. Thus he (nineteenth 
edition "Political Economy," page 486) says: 

If now we may fairly suppose that , on the average, for each one foreign article paying 
a duty into the treasury, there were four domestic articles raised each in price as much 
as the foreign article paid in duty, then it follows that the people paid in each of those 
years under chieiiy protective tariff- taxes $632,000,000, or $13,640,000,000 in all, no penny 
of which went into the treasury of the United States ; that this is a reasonable supposi- 
tion appears partly from the known proportion between imported and domestic as to 
several leading articles; for example, of steel rails in 1880 the domestic was 20 times the 
imported, and the people paid 19 times more under the duty than the treasury got ; on 
woolen blankets in 1881 the Treasury took in less than $2,000, while the people paid in 
the extra price of blankets more than 1,000 times thatsum thatyear,— and on irongoods 
of all kinds we have seen that the average duty was about 77 per cent., while the vast 
bulk of iron consumed is known to be of domestic production. 

This pyramid of accusation rests on that small apex, the open- 
ing "if." Political economy cannot be built up into a science, 
on "if we may suppose." We mayn't suppose any of these 
things, because none of them are true. "If," in 1880, steel rails 
sold below iron rails, at one-thii'd the price steel rails brought 
when we were dependent on the importation, and at less than pig 
iron had sold for in the two last periods of low duties, viz., 1857 
and 1837, the duty which had so reduced prices would not "tax" 
the American buyer of rails, even if it should, by depriving 
English makers of their largest market, knock the English price 
still several points below the American. " If " the duty had in- 
creased the price of steel rails, and like duties had also increased 
prices of all commodities, and also the volume of all means of 
payment, it would not be a tax. Railroad companies are not 
taxed in buying steel rails at $10 a ton more than English prices, 
if they pay for the American rails in transportation, and must 
pay for the English i^ails in money which they haven't got. 

Nor are farmers taxed by the duty on steel rails, if it appears 
that the substitution of steel rails for iron, at whatever price, is 
always a relief from cost of transportation, and never an addition 
to it ; that farmers pay for transportation, not at all according to 
cost, but according to the ratio of the quantity of goods to be 

* See the figures and diagram verifying this in tUe case of salt, post, ch, IQ, 



590 



ECONOMIC PHILOSOPHT. 



transported to the means for carrying them, and, finally, that by 
whatever argument a duty adds to a price, the farmer is getting 
4 cents a pound more for his butter, and a like increase on all his 
other products, because of the duty. 

The Iron and Steel Association publishes a list of relative 
prices, in store, of English and American iron and steel wares in 
1882, as follows : 



Axes, No. 2, per dozen. 
Augers, cast-steel, per dozen, 
Auger bits, per dozen, 
Chisels, socket framing, per dozen, 
Hatchets, shingling, per dozen. 
Pickaxes, besr assorted, per cwt. 
Saws, hand, S6 inch, per dozen, 

Saws, cross-cut, each, 

Planes, jack, 18 inch, 2% double iron 
per dozen, f 

Strap hinges, light, per dozen pairs, 

Wrought-iron hasps and staples, 8 \ 
inch,per dozen, j 

Coffee mills, box, square, No. 1, each, 

Cdst-steel sliears, trimming, common | 
8 inch, per dozen, j 

Shovels, No. 2, square, per dozen, 

Door-knobs, mineral. 



English price. 

$9 
1 inch, $4.48; 3 inch, $12 

1% inch, $4.48 
1 inch, $3.72; 2 inch, $7 
No.2, S6 
$7 
Common, |6; bcst,$13.48 
4 ft. $2.36; 41/ ft., $2.60; 
, 5 ft, $3.12 
) 



6 inch, $1.48 
$0.72 



$7.48 



American price. 

$9 50 
1 inch, $5.76; 2 in. $11.52 

\]4 inch, $3 

1 inch, $5.76; 2 in. $8.74 

No. 2, $5.25 

$9 

Common, $5; good, $15 

4 ft. $2; A% ft. $2.35; 5 

ft. $3.12 

$10.20 



$0.65 

$0.67 
$4 20 



These prices show that, as to iron and steel wares in 1882 (and 
the facts were essentially the same from 1868 to 1880), the duty 
did not operate as any tax whatever on the American consumer, 
since American prices were as low as the foreign. 

As to woolen blankets the facts are similar. In 1882 the writer, 
in a lecture before the Revenue Reform Club at Brooklyn, ex- 
hibited three woolen blankets, one made in Manchester, one in 
Minneapolis, and one near Boston. The English blanket was the 
only one of the three that contained any shoddy whatever, as 
could be tested by pulling out a pinch of the wool. Yet the manu- 
facturer's price on each of the three was 68 cents per pound. 

As to steel rails, the prices have been higher in America than 
in England, sometimes by the amount of the duty, and sometimes 
by only a varying fraction of that amount. As the Americans 
have developed the manufacture of steel rails, until they now 
manufacture more than the English, it is plain that prices in En- 
gland have at all times been much lower than they would have 
been, if we had called upon English makers to double their total 
production in order to fill our demand. . Under the influence of 
our competition, prices which were $165 in gold in 1864 have 
fallen to as low as $28.50 per ton. 

Jf it were true that wherever there is any importation, how 



A MED IW TIO AD ABS UBD UM. 591 

ever small, under a duty, the duty enhauces the price of the 
whole domestic product by the amount of the duty, the farmers 
of America would be the recipients of more taxes than all the 
governments of Europe combined collect. 

For instance, we in 1869 imported 6,685,093 pounds of butter, 
under a tariff duty of four cents per pound, which paid the rev- 
enue $267,403.75. This, on the free-trade theory, added four cents 
per pound to the price of all the butter consumed in the United 
States, because the home price was raised by the duty. In 1860 
we produced 460,509,854 pounds of butter ; and supposing our 
production to have increased by 60 per cent., which was our 
average in other products, we in 1869 produced 736,256,897 
pounds. Now, although this was one hundred times as much as 
we imported, yet, as our production of coal was forty times as 
much as we imported, and of lumber twenty -four times, and of 
pig-iron twenty-four times, it will be seen that the same principle 
applies to all, viz. , that the importation is insignificant as a means 
of supply, compared with the domestic production. But, argues 
Prof. Perry, that makes no difference. The greater the amount 
of the domestic supply, the more certainly its producers have 
their price increased by the amount of the duty. Assuming this 
to be true, butter paid four cents extra per pound to the butter- 
makers on account of the duty being a tax on the consumers of 
buttex', amounting to $39,454,275.88 annually. 

Again, we imported 190,000 bushels of potatoes, which paid a 
duty of 25 cents per bushel, or $46,458.81. Now, according to 
Prof. Perry, the "potato monopolists" had the price of their 
whole domestic product enhanced by 25 cents per bushel. Our 
domestic product in 1860 was 152,000,000 bushels, or in 1870 say 
243,200,000 bushels, the consumers of which must have paid for 
them $60,800,000 more than they would have been compelled 
to pay but for the tariff. For if it be not a I'ule that the foreign 
price with duty added fixes the price of the home product, ' ' free 
trade " has lost its grievance. 

Again, we imported grains, fiour and meal, under an average 
duty of 15 cents per bushel, upon which we collected a total I'ev- 
enue of $954,616.46. Our domestic production of those articles 
amounted in 1870 to about 2,289,270,850 bushels, which, if in- 
creased by the average rate of duty on the amount imported, 
would have levied a tax on the consumers in favor of the ' ' grain 
monopolists" of $343,290,627.50, or about equal to our whole 
national taxation. On these three articles, butter, potatoes, and 



592 ECONOMIC PHILOSOPHY. 

grains, the consumers would be paying the producers a tax, over 
and above the cost of production, amounting to $433,544,902. 

Extending the same calculation to all of the 1,200 articles on 
which duties are charged. Prof. Perry might with the same ease 
assume and state that the . people are taxed in all by the tariff 
at least five thousand millions of dollars, or the equivalent of all 
their annual earnings, leaving them absolutely not a crust nor a 
bone, except as all live on the protective taxes they collect. 

A theory which results in such startling conclusions can with 
no more truth be applied to pig-iron, wool, salt, coal, and lum- 
ber than to grain, potatoes, and butter. 

If it be said that grain, potatoes, and butter are articles of ex- 
portation as well as of import, so are pig-iron, cotton goods, 
salt, iron and steel manufactures, and lumber. Are our farmers 
collecting $433,000,000 of "private tax" on their grain, butter, 
and potatoes, over and above the sum paid the government on 
the portion imported of these articles ? If not, neither are the 
American manufacturers of pig-iron, salt, lumber, and coal 
collecting a tax on their whole product equal to the amount of 
the duty. 

On the contrary, if the true law of prices is that the price of, 
any article depends on the ratio of the whole supply to the whole 
demand, and that the foreign price oialy contributes to regulate 
the domestic price in the proportion that the foreign supply bears 
to the domestic supply, then at what conclusion do we arrive ? 
Our importation of coal, bemg adequate to supply only one- 
fortieth part of our demand, contributes one part in forty toward 
fixing the price. If there is a fall or rise of 40 cents per ton in 
coal, one cent per ton of the fall or rise may be credited to Nova 
Scotia. So, as we produce twenty-four times as much pig-iron 
and lumber as we can import, our imj)ortation of either only 
affects by one twenty-fourth the actual changes in price, and 
so on. 

But if this be so, then the fraction of influence exercised by the 
foreign supply over the domestic price, is so insignificant as to 
make it substantially true in the cases of lumber, coal, pig iron, 
grains, butter, potatoes, flour, and, in a scarcely less degree, of 
rice and salt, that our domestic supply determines not only our 
own price but the foreign price of those producers abroad who 
sell their products in our markets ; for butter-makers in Canada, 
and coal miners in Nova Scotia, will not sell their butter and coal 
to Canadians and Nova Scotians except at the price they can get 



WHAT PRODUCERS RECEIVE. 593 

for it in tlie States. Now, in considering the price they get for 
their article in the States, they know first that they can get the 
average price of the States, and , secondly, that out of this price 
they must pay the duty. If they can afford to import at the price 
hei'e prevailing, and pay the duty out of what would else he their 
profits, they import ; if not, they stop importing. So that in all 
these cases where the ratio of the amount imported to the domes- 
tic production is sinall, and no particular quality in the imported 
article compels its impoi'tation — viz., butter, grain, lumber, coal, 
potatoes, salt, and wool, — the foreign producer pays the duty. It 
can not raise prices. It collects fully twenty millions of taxes 
out of those foreign producers whose industries compete Avith 
ours, and to whom free trade means freedom to profit by our 
high prices. This is not the only or the principal mode in which 
protective tariffs collect our revenue out of foreigners ; but it 
covers about $20,000,000 of taxes so paid. 

Free-trade observers are not wholly blind to the actual work- 
ing of these duties on Canadian products. The Chicago Tribune, 
in discussing the gain the two countries, and especially Canada, 
would derive from annexation, asserted that the Canadians, as a 
rule, pay the duties both on what they buy from Americans and 
on what they sell to the Americans. A. Canadian-American 
writes to it to know, if this be true, "then what becomes of the 
free-trade theory that the consumer pays the duty ? " To this the 
Tribune replies : 

The consumer pays the price of the goods that are sold to him; the •producer only re- 
ceives what is left after deducting tariff taxes, freight, and middlemen's profits. The 
United States is the greatest and best market for Canadian agricultural products. It is 
in this country they find their best marljet for their surplus oats, barley, buckwheat, 
potatoes, and other vegetables, horses, fat cattle, veal, mutton, poultry, butter, eggs, and 
often for their fine wheat and flour, notwithstanding the high duties on all these products. 
Kemove the duties, and the Canadian farmers would get from one-fourth to one-third 
more for all their surplus stuff, which would amount to many millions of dollars a year. 

This is from the pen of a veteran editor, who has, at times, 
spent much time in Canada, studying the economic relations of 
that province to the American States. Mr. Medill's admission 
beuag true, the Canadians pay, on the products they market in 
the United States, as follows : 

On $8,000,000 worth of lumber sent from the Ottawa district into New 

York and New England, ^ . . . . $1,690,000 

On coal from Nova Scoria, ...... 400,000 

On breadstulls, barley, and malt, ..... 2,750,000 

On potatoes, say, ... . . . . 500,000 

$5,340,000 



604 ECONOMIC PHILOSOPHY. 

The Canadians are indebted politically to the United States for 
their vu'tual independence of England, and industrially for 
markets which are not only the best in the world, but are a thou- 
sand miles nearer to them than they are to the greater part of 
the American people. The American tariff happily enables them, 
without the embarrassments of a political connection, to pay, 
as equitably as if they were states in the American Union, for 
the involuntary national sovereignty which has been thrust upon 
them by exterior forces, in which they had no desire to take part, 
and which they are under no military tax to maintain. 

This is one of those cases to which the remark of Prof. Sidg- 
wick ("Principles of Political Economy," p. 576) applies: "It 
must be admitted that the imposition of import duties is, under cer- 
tain circumstances, a method, at least temporarily effective, of in- 
creasing a nation's income at the expense of foreigners, though, 
on various grounds, a dangerous method ; and the same is true 
of export duties, whenever a country has a monopoly of any pro- 
duct keenly demanded." The dangerous quality of such duties 
is not an economic but a political and military question. 

208. Getting- Cutlery by Making Buttons. — Prof. Perry 
says : 

Now, how can the free interchange of commodities lessen the demand for labor or 
the rewards of labor ? You are employing a hundred men. You wish to obtain a cer- 
tain quantit3' of cutlery. Does it make any difference to you, or to the wages of your 
men whether you employ them directly in making the cutlery or in m,aking the but- 
tons with which you can purchase the cutlery from abroad ? If, by employing them 
in making buttons, you can purchase more and better cutlery (and if you cannot, there 
is no temptation to an exchange), is it not plain to reason that it is better for you, and 
that you can afford to pay them better wages, than if you employed their labor less 
effectively upon cutlery ? 

Prof. Perry here begs the whole question by assuming that the 
full hundred men remain in full employment at full wages. 
But how does the case stand if you need to employ one hundred 
men, and only seventy-five of them can find employment at but- 
ton-making, while the other twenty-five might find employment 
at cutlery ? Then, is it not plain that if you put them all at but- 
tons, you are working for an over-production of buttons, a fall 
in their price, and, consequently, a fall in the wages of those who 
make them ? Or, if you employ only seventy-five at buttons, 
then they must not only support themselves, but also the other 
twenty -five who are doing nothing because you do not employ 
them at cutlery ? In all international exchange, the latter is the 
illustration that applies to the facts, because in all natigns there 



BO UNTIES BLEE!D.—D TJTIE8 FEED. 595 

is a fund of unemployed labor which a greater diversification of 
industry would employ. If all the people in the United States 
could be induced to raise corn, coi*n would, of coui^se, fall in 
price to, say, a cent a bushel, or almost nothing. The expendi- 
ture of effoi't required from each corn producer to raise it, would 
average four or five times as much at it now does, because we 
raise corn only under the most favorable conditions. We 
should then raise it under all possible conditions, and with labor 
least adapted to it. Since, if our whole population should go to 
raising it, we would sell it for one-twentieth its present price, 
though at four times as much labor per bushel, this would 
prove, in Prof. Perry's mind, the vast advantage which would 
result from our all raising corn, because we could raise it so 
much cheaper than if only part of us raise it. Yet it is plana that 
the real result would be that we could not sell our corn for enovigh 
of the necessaries of life to keep our people from perishing. 
Hence it is plain that, with sixty millions to find employment for, 
and to feed, we can more certainly employ them all, if we pro- 
duce both our cutlery and our buttons, and also the crops they are 
purchased with, than if we produce either alone. 

The actual experience of the cutlery trade in the United States 
is worth more than theory. When Dr. Francis Wayland, in 
1842, wrote his free-trade text-book on political economy, Amer- 
ican hardware was almost unknown. All production has three 
stages, and the free-trade sophistry varies to adapt itself to these 
stages. When a production is not yet begun, to protect it is 
folly, because it can never be made profitable. When the pro- 
duction is well under way, the argument becomes that it would 
have advanced much faster if it could have had free raw materials. 
Wlien it has won the battle, and is exporting products, of which 
it was once predicted there could be no profitable production, the 
argument is that protection is restricting the export ! In 1842, 
therefore, Wayland ridiculed the notion of expecting that we 
should become makers of cutlery. He said : 

We pay a heavy duty on catlory in this country, while not a thousandth part of the 
cutlery used is made here. It would be vastly cheaper to pay a bounty sufficient to raise 
all the cutlery made in this country to its present prices, and it would be, for aught 
I see, just as good for the cutler. — WaylancTs "Political Economy,'''' edition of 1S42, 
p. 140. 

A free-ti'ader always wants a bounty to be substituted for a 
duty, because lie loves the foreign manufacturer better than he 
loves the National Treasury. A bounty would be more and more 



596 ECONOMIC PHILOSOPHY. 

costly to the country as the production increased. A duty is 
cheapened, to the consumer, with every increase in the home pro- 
duction. It repeals itself as a tax, as home prices come down to 
the foreign. 

The British Parliament's Select Committee on Scientific Instruc- 
tion reported to the House of Commons, on July 15, 1868, that the 
manufactures of the United States had wholly or largely super- 
seded those of Birmingham, England, in the common markets of 
the world, including the English colonies, in the manufacture of 

Adzes, Horse-nails, 

Augers, Kibbling machines, 

Axes — best article, Locks— door, chest, cupboard, and drawer, 

Brass ware (stamped). Mowing-machines, 

Breech-loading muskets. Nuts and bolts, 

Buckets, Penknives, 

Carpenters' broad-axes, Petroleum lamps, 

Clocks, Plows, 

Clothes-pegs, Plumbers' brass foundry, 

Coffee-mills, Pumps, 

Coopers' tools, Revolvers, 

Corn-crnshers, Rice-hullers, 

Cotton gins. Sausage machines. 

Cultivators. Scissors, 

Curry-combs, Sewing machines, 

Cut nails, Shoemakers' tools. 

Door- latches. Tableware, 

Gas-fittings, Traps— rat, beaver, and fox, 

Gimlets, Washing machines. 

Hay-rakes, Watches— machine made. 

Hoes— for cotton. Weighing machines. 

This state of our manufactures, as to cutlery, had been brought 
about by eight years of protection. For Dr. Wayland's advice 
had been followed from 1846 to 1860. 

The London Times, commenting on the above report, said : 

At this moment Birmingham is losing its old markets. A few years ago it used to 
supply the United States largely with edged tools, farm implements, and various 
smaller wares. It does so no longer, nor is the cause to bs sought merely in the Amer- 
ican tariff. It is found that the manufacturers of America actually superseded us, not 
only in their own, but in foreign markets and in our own colonies, and the Birmingham 
Chamber has the sagacity to discover, and the courage to declare, that this is owing to 
the superiority of American goods. 

High as are the wages of an English artisan, those of an American artisan are higher 
still, and yet the manufacturers of the United States can import iron and steel from this 
country at a heavy duty, work up the metal by highly paid labor, and beat us out of the 
market after all with the manufactured article. How is that to be explained ? 

The Americans succeed in supplanting us by novelty of construction and excellence 
of make. They do not attempt to undersell us in the mere matter of price. Our goods 
may still be the cheapest, but they are no longer the best, and in the country where an 
ax, for instance, is an indispensable implement, the best article is the cheapest, what- 
ever it may cost. Settlers and emigrants soon find this out, and they have found it out 
to the prejudice of Birmingham trade. 



INVENTIVE WORKMEN. 59^ 

The skill, greater ingenuity, intelligence, and progressive capac- 
ity of American workmen are due to their higher average wage 
indirectly. Here, mechanics and oi^eratives receive so ample a 
compensation for their services that, for fifteen years, the chief 
motive in forming labor ox-ganizations has been not to secure 
themselves against want, but to perfect some scheme by which 
they can either rule their employers' business, or dispense with 
employers entirely. There, a temporary loss of employment 
drives them upon the parish for relief. No man engrossed with 
constant cares, and oppressed with half-satisfied wants, fight- 
ing his way from day to day, or from meal to meal, in the 
dull struggle for subsistence, can have leisure, inclination, or 
incentive to study out improvements in the processes by which 
he earns his daily bread. Steeped in ignorance and poverty, he 
learns his ti-ade by rote, without knowing the principles with 
which it is imbued. He is regularly handling the tools and 
materials with which new experiments are to be tried. He 
witnesses regularly the operations of nature, whether in the 
motions and pressures of bodies, or in their chemical actions on 
one another. But these golden opportunities pass without fruit- 
ful suggestion, because they repi'esent to his mind only a routine 
of methods by which he is able to secure a scanty subsistence. 
Few great discoveries have been made by chance, or by ignorant 
persons. They are generally accomplished by individuals of com- 
petent knowledge, and who are in search of them. Hence, while 
English workmen are skillful, expert, and useful, in a more auto- 
matic way, their inventive faculties since 1846 are relatively 
latent. What they formerly, under more favorable circumstan- 
ces, contributed to improvements in machinery and fabrics, is 
largely lost of late to the avocations in which they have been 
trained. 

The case, however, is very different with the American me- 
chanic. Educated, well paid, well fed, well clothed, well housed, 
he is not consumed with those large cares, which preclude close 
application on the part of his employer to one special line of 
experiment. Nor is he borne down by those cruel deprivations, 
which beset the life of his English competitor. He is always in 
the way of intelligently perceiving what is wanting, or what is 
amiss, in the old methods ; and has a better chance as well as a 
stronger inducement to make the needed improvement. Our 
successful inventors have been ' ' pushing " men, whose daily 
experience at their work has shown them some defect in its pro- 



598 EGONOMW PHILOSOPHY. 

cesses, or suggested a more productive mode of reaching its 
results. In this way American information and ingenuity have 
been applied to the ' ' edged tools, farm implements, and various 
smaller wares, " instanced by the London Times, and carried them 
to such a degree of superiority over like products of English 
manufacture that they are driving the latter out of the markets 
of the world. Though not so cheap, measured merely by the sell- 
ing price, they undersell competitors in usefulness, adaptability, 
and excellence. 

In the opinion of the fathers of the Republic the question 
whether we ought to make both our cutlery and our buttons de- 
pended solely on whether our country produced both the ore of 
which to make the steel and the bone or other raw material of 
the button. In 1810 Jefferson, then President, wrote to Thomas 
Leiper, of Philadelphia, as follows : 

"I have lately inculcated the encouragement of manufactures to the extent of our 
own consumption, at least of all articles of which we raise the raw material. On this 
the Federal papers and meetings have sounded the alarm of Chinese policy, destruction 
of commerce, etc. . . . But I trust the good sense of our country will see that its 
greatest prosperity depends on a due balance between agriculture, manufactures, and 
commerce, and not in this protuberant navigation, which has kept us in hot water from 
the commencement of our government, and is now engaging us in a war.'' 

To Governor Jay, a little later, he wrote : 

" An equilibrium of agriculture, manufactures, and commerce is certainly become 
essential to our independence. Manufactures, sufficient for our own consumption, of 
what we raise, the raw material— and no more. Commerce sufficient to carry the sur- 
plus product of agriculture, beyond our own consumption, to a market for exchanging 
it for articles we can not raise— and no more. These are the true limits of manufac- 
tures and commerce. To go beyond them, is to increase our dependence on foreign 
nations, and our liability to war." 

According to President Jefferson, therefore, we ought to man- 
ufacture all the iron, steel, woolen, and cotton goods, for which 
we produce the raw materials, the iron, steel, coal, wool, cotton, 
breadstufFs, and provisions. And the fact that we export a large 
portion of our cotton unmanufactured, and import much of our 
dry-goods, ii'on and steel wares, etc., indicates what Mr. Jeffer- 
son would style "an unbalanced and protuberant agriculture," 
and "increases our dependence on foreign nations, and our 
liability to war." 

209. Must a Nation Import Commodities in order to 
Export Them, or Buy Them in order to Sell Them ? — In 
actual life it would be deemed absurd for a customer to apply to 
a mei-chant the doctrine that he must buy a farmer's load of 
pumpkins or potatoes, not because he wanted them, but because 



IMPORTS AND EXPORTS. 599 

unless he did so he could never sell sheetings or hardware to the 
farmer. But Prof. Perry saj^s : 

" If we will not buy, of course we can not sell. If we prohibit importations, we 
thereby necessarily prevent exportations ; that is to eay, we take away their market 
from those who manufacture or grow the goods which would be exported." 

The meaning of this is that, if we will not import English iron, 
we can not find sale abroad for American grain, and our gram 
will decline for want of the foreign market. 

The professor, in his preface, prides himself on this point, as 
being in some sort his pet hobby and private property. He at- 
tempts to correct President Garfield's statement that the fathers 
of the repubUc, from 1790 to 1816, argued the tarifl: question as 
fully as it has ever since been argued, by saying that they failed 
to present this point. The protectionists of the period referred 
to include every statesman, in both political parties, from 1790 to 
1816. They did not present this alleged point because there were 
none among them who held this view. 

Our exports are all free of duty, and our ability to sell corn 
in Liverpool depends in no degree whatever on our willing- 
ness to buy iron or any thing else — except gold. We sell our 
corn for bills of exchange drawn against either the products 
which the country to which we export sells us, or against pro- 
ducts which that country sells some other country, and with the 
proceeds of which it pays us. If we will sell more corn for less 
money than the Germans or Russians, then we can sell our corn 
in Liverpool, and not otherwise. If it were possible for one 
nation steadily to produce all the wares it needed for its own con- 
sumption, and at the same time to produce cheaper than all other 
countries that which they would need, it would import their gold 
steadily until the rise in its prices, occasioned by this importation 
of gold, would raise its money cost of production of goods to a 
figure at which foreign nations would cease to buy them. 

The countries, against whose products our protective duties 
discriminate most, are those which take nearly all of our exports. 
Tlie countries, on whose exports we impose no duties, take hardly 
any of our exports. Between us, and the countries against whose 
exports our tariffs discriminate, there is a continual balance of 
trade in our favor, and they are sending us gold, while between 
us and the countries whose products we admit free, the balance 
of trade is largely against us. For instance, all our duties for the 
protection of American manufactures rest on the imports from 
England, Scotland, Ireland, Denmark, Belgium, Holland, Russia, 



600 ECONOMIC PHILOSOPHT. 

Spain, Portugal, Sweden, Norway, and Germany. Averaging 
the exports and imports for the two years 1880 and 1881, so as to 
arrive at the mean per year between the United States and these 
countries, constituting Europe, we find that we sent to all these 
countries exports amounting in value to $717,026,542 per year, 
and bought from them imports amounting only to $360,229,555, 
leaving a balance in our favor of $356,796,987 per year. If this 
had been the whole of their and our foreign trade, it would 
have constituted an actual net balance of trade in our favor, 
causing an influx of gold to that amount, less such sum as might 
be required to pay interest on our loans, and freights on our 
ocean carriage. 

The countries which, we are told by Prof. Perry, can not buy 
from us, except as we buy from them, buy from us exactly two 
dollars' worth of our produce where we buy one of their mer- 
chandise. 

On the other hand, the countries from which we import more 
than we export to them, are Italy, China, Japan, British Indies, 
Dutch East Indies, Cuba, Porto Pico, Dutch West Indies, Cen- 
tral America, Venezuela, Bi'azil, Uruguay, and the Argentine 
Republic. To all these countries our mean exports, averaged, for 
1880 and 1881, were $50,259,064 per year. Our mean imports from 
them during the two years were $216,471,440 per year. This left 
a net annual balance of trade against us during these two 
years of $166,112,376, which would have been an actual bal- 
ance of trade against us had it not been canceled by our balance 
of trade with Europe, leaving a net balance of trade with the 
world in our favor of about $210,000,000 a year. This, except so 
far as it was canceled by interest on the European loans to us 
and the freights on our ocean carriage, was the actual balance of 
trade in our favor for which we got a net increase in our national 
stock of coin. 

The largest item in our free list is coffee, of which we import 
$56,784,391 per year, while England and most of the countries of 
Europe impose a duty on it. Brazil was considerably benefited 
by the removal of our duty on coffee. Prices here did not recede 
by the amount of the duty, when the duty was removed, as was 
expected, while the letter of the Rio Janeiro correspondent of 
the Commercial Bulletin, of Boston, September 30, 1880, de- 
clares that the prices went up in Rio Janeiro simultaneously with 
the removal of the American duty. 

Notwithstanding we give Brazil perfect free trade in coffee, 



BUYING AND SELLING ARE TWO. 601 

while England charges a heavy duty upon it, yet Brazil buys 
only 19,057,749 of our merchandise, while we buy from her 
$50,051,955. We would buy about the same amount of her prod- 
ucts if the Brazilians did not buy a pennyworth of omys. The 
American merchants who import . coffee from Brazil have no 
connection of acquaintance, sympathy, or interest with tlae 
American merchants who send our products to Brazil. The per- 
sons and firms in the import trade do not even know, as a 
rule, of the existence of an export trade as a fact bearing on their 
own business, except as it may affect rates of exchange and 
freights. Of a total of $i40,670,021 of imports from China, 
Japan, British India, East Indies, Central America, Venezuela, 
Brazil, Uruguay, Argentine Republic, and Dutch West Indies 
there were only duties on $24,191,450, the remainder being on the 
free list. And yet Americans export to all these countries only 
$30,746,244 to offset an importation of $140,670,021. Eleven - 
fourteenths of our purchases from these countries are paid for by 
shipments of merchandise, chiefly manufactures from Europe, 
which we in turn pay Europe for with our surplus of exports of 
food and cotton to Europe over imports of goods from Europe. 

It is the three-cornered character of the world's international 
trade, which gives so important a position, financially, to London, 
as its center. Its adjustments are made by means of bills of ex- 
change, almost wliolly without the use of coins. So far from any 
principle of barter entering into it, as between the aggregate 
populations of two nations, barter cuts an infinitely less figure 
in it than it does in the ordinary purchase of merchandise in 
cities. Whoever should try the experiment, therefore, of inducing 
one of our retail dry goods merchants to accept a " load of pump- 
kins," or a fat hog, in exchange for a silk dress or a camel's hair 
shawl, would appreciate how supremely ridiculous is the assertion 
that international trade is carried on by barter, either in appear- 
ance or in effect. The difiiculty, of trading a fat hog for a silk 
dress would certainly not be removed if the owner of the hog 
resided in one country and the owner of the silk dress in another. 
And yet this economic error that international trade is conducted 
by barter, instead of by money, has a wide following among those 
who suppose themselves to have given some attention to political 
economy. 

The fact that the aggregate quantities of goods bought by a 
nation equal the quantities sold, and that the bills drawn against 
goods sold are set off against those drawn for goods purchased, 



602 EGONOMIG PHILOSOPHY. 

does not convert the whole into barter, or exchange of goods for 
goods. 

210. The Theory of Barter does Hot Aid the Free- 
Trade Criticism. — To suppose that international trade is in 
effect barter, when logically traced to its conclusions becomes only 
the most formidable of all objections to the free-trade criticism. 
For free trade is always a mere criticism and never an actual 
practice between nations. If, however, it wei^e true that 
international trade were barter, and that England were pre- 
pared to give us actual free trade, it would still devolve upon us 
to consider whether we could barter* our crops for manufactured 
products as profitably in dealing with English as with home 
manufacturers. To all barter with foreign producers, the cost 
of transportation operates as a restriction and prohibition on all 
bulky and stationary products, limiting our capacity to barter, 
not according to the scale of our entire capacity to produce, but 
strictly according to the scale of our capacity to produce com- 
modities which are highly transportable, i.e., which combine 
great value and ranch labor with small bulk. The only agricul- 
tural products which do this ai^e wheat, cotton, preserved meats, 
and fruits, rice, tea, coffee, and a few others of which we can 
produce cheaply only the first three. In barter with European 
producers our hay, straw, wool, building stone, ice, heavy lumber, 
land, labor, fresh meats, live stock, vegetables, farm and garden 
fruits, indeed thirty-nine fortieths of. our agricultural products 
are wholly unavailable, directly or indirectly, because like pro- 
ducts can be obtained by foreign producers nearer to their own 
homes, and usually at their very doors. Hence when we trans- 
late commerce into a barter of commodity for commodity, instead 
of a sale of commodities for money of account, a powerful objec- 
tion to buying abroad that which we can produce at home arises 
in the fact that, at home, we can barter for it thirty-nine fortieths * 
of all the bulky pi'oducts a new country is capable of producing, 
while abroad we can barter for it only such commodities as will 
stand transportation, viz., one-fortieth of the agricultural prod- 
ucts which the land will produce. 

In this sense the trade between producers of bulky products of 
small value, and that between producers of small products of 
great value, can never be made free, in fact, or equal. For the 
former are oppressed by a transportation tax which keeps their 

* American exports are usually lees tlian one-fortietlj of American proclucte, 



WHAT ARE PUBLIC INTERESTS. 603 

products at home in any event, while the lattei' can send their 
product to the antipodes at a cost which hardly diminishes per- 
ceptibly the profits. 

211. Private, Special, and Public Interests. — A favor- 
ite position of free traders is that protection is brought about 
through the influence of special and private interests. Prof. H. 
C Adams, of Michigan, in referring to the claim that petitions 
for the adoption of a protective policy have at various times in- 
fluenced Congress, says : * " Government by petition is govern- 
ment by special intei^ests, and for that reason one must be very 
careful in accepting requests for special legislation as evidense of 
public sentiment." Does Prof. Adams hold that there is or can 
be any such thing as a " general interest, " which will not arise 
out of the interest the general public take in a matter which is 
primarily of special, local, or private interest ? We know of 
none. The taking of human life was at first regarded as of special 
interest to the person whose life was taken, and to those depend- 
ent upon him. It interested others only so far as they chose to 
take an interest in it. When Cain was asked, " Where is Abel ? " 
his answer, "Am I my brother's keeper?" is equivalent to 
saying, " That is a matter merely of private interest.'' If the 
State of Maine were invaded by a public enemy, the affair would 
be, physically, a matter of private interest only to people in the 
route of the invading army. It would be only a matter of public 
interest, to those of the public who were sufficiently charged with 
the national feeling, to take an interest in it. When the Southern 
States seceded, a few attempted to say : ' ' That is only a fight 
between the abolitionists and the slave-holders. It does not inter- 
est the people generally, or me in particular." The defence of 
life, liberty, and property are assailed. Their translation into 
matters of public interest depends not on their intrinsic quality, 
but on the degree in which the public is charged with the disposi- 
tion to be interested in it. All matters of public interest, there- 
fore, ai^e mere matters of private interest publicly considered. 
Hence to ask that the public, generally, shall decline to consider 
a matter which primarily affects a private interest, is in effect to 
abolish the whole sphere of public interests, by eliminating from 
it every one of the matters now included under its consideration. 

But is it true that free trade, as that term has been currently 
used, covers any less a class interest or private interest than pro- 

— I 

* " Taxation in the United States, 1789 to 1816," p. 3.^. 



604 ECONOMIC PHILOSOPHY. 

tection ? All political and social economy has to do with ques- 
tions which are in their first instance of private and special 
interest, i.e., they must aifect individuals, and through individuals 
only the public. A. danger which could affect all parts of the 
country and all classes of the people, at once and equally, might 
possibly be found in a collision of the earth with some other 
celestial body, but no such phenomenon comes within the do- 
main of human government.* 

In America the free-trade criticism has centered in the importing 
class as definitely as, in England, it has emanated from the manu- 
facturers. Petitions have been printed, lobbies have been sup- 
ported, journals have been founded and subsidized, and free-trade 
leagues have been formed through a stimulus invariably inspired 
from New York city, and having its seat and motive in the tem- 
porary increase of profits which would accrue to the importing 
class if reduction in duties on competing articles could be effected. 
Though the utterance has been in the name of the consumer, the 
oration has almost invariably been inspired or paid for by the 
impoi^ter. The publication by the New York Tribune in 1868-70 
of the lists of contributors to the funds of the Free Trade 
League showed that the money which ran the league was con- 
tributed by persons directly interested in the business of import- 
ing, or foreign manufacturing, and by no others. That league 
■circulated extensively, through the American News Company, 
a sheet entitled the People's Pictorial Taxpayer, purporting to 
illustrate, by various cartoons and pictures, the baleful effects 
of levying a tax on such foreign products as compete with 
our own. Its arguments were surrounded by the cards of 
Wm. Jessup & Sons, manufacturers of steel and importers of 
iron, ShetReld, England; of Congreve and Son, of New York, 
agents of the Toledo Steel- works of Sheffield, England; of A. 
B. Sands & Co., importers of drugs, one of whose members, 
Mahlon Sands, served the Free Trade League disinterestedly 
as secretary; of John Clark, Jr., & Co., foreign manufacturers of 
spool cotton; of Van Wart & McCoy, the New York agents 

* Eichard Cobden, addressing the people of Manchester in favor of free trade, 
October 9, 1843 (Speeches, p. 49), said: " I am afraid, if we must confess the truth, 
that most of us entered upon this struggle with the belief that we had some distinct 
class interest in the question, and that we should carry it by a manifestation of our 
will in this district against the will and consent of other portions of the communitj'. 
I believe that is our impression." On page 53 he says they were told " that our object 
is to bring agricultural laborers into the manufapturing districts in order to reduce 
wa£es there, " 



IMPORTERS INSPIRE. 605 

of Van Wart, Son & Co., of Birmingham, and of a dozen other 
English manufacturing firms ; of F. W. Harrold, hardware, 
Birmingham, England ; of Sampson & Bro., importei\s of foreign 
iron; W. & Gr. Dutcher, of Sheffield, England, file and tool manu- 
facturers ; of Spear & Jackson, of Sheffield, England, steel saw- 
makers ; and of Wm. Irving, of New York, agent for two foreign 
cutler J and edge-tool firms ; and of Wm. Schiefflin, importer of 
drugs. Besides these there were the cards of several foreign 
insurance companies, but not of a single Anierican producer of 
any kind. If it were not that the importers in many cases 
share largely the burden of the duties, foreign houses would not 
so usually establish agencies in New York on purpose to evade 
duties. What evidence, for instance, would a consignment from 
Jones, Robinson & Co., of Birmingham, England, to Robinson, 
Jones & Co. (the same parties) in New York, afford of the actual 
prices of the consigned goods, if a true statement of their foreign 
prices involved the payment of fifty per cent, duties, while an 
under-statemeut involved the payment of less ? Mr. David A. 
Wells, in one of his reports, states that many of these American 
agencies of English firms are established on purpose to evade the 
revenue, and that in many lines of goods their smuggling almost 
defeats the collection of the duties. The Committee of Congress 
on Manufactures reports that the smuggling and evasion of duties 
by false invoicing, through the English consignors and American 
consignees being one firm or partner or agents of each other, 
amounts to twenty per cent, of the fair duties. The effort to 
enlist American farmers and citizens, generally, in the free-trade 
movement, has hitherto been conducted with as little spon- 
taneous native aid, and by methods as distinctly foreign, as the 
effort to promote the importation of opium into China or the 
spread of Christianity in Turkey. It finds some advantage in the 
fact that we take strongly to English fashions wherever they 
ai'e admissible. The free-trade criticism seizes upon many points 
of attack, some of which must at times present an appearance of 
l>lausibility on a superficial examination. Its economic state- 
ments, however, without a solitary exception, all rest finally 
upon falsehood, either of fact or of inference, or grow out of the 
tendency to mistake protection in a disguised form for free trade. 
It remains a criticism, not a policy. A policy succeeds when it 
accomplishes desired results. A criticism may succeed in merely 
obstructing a policy. Protection stands as the sole policjjr of 
jiations, 



606 ECONOMIC PHILOSOPHY. 

212. Protection Universal. — "Free foreign trade" is, on 
its face, a term of complaint, which implies the pre-existence of 
some legislative policy which is charged with restricting foreign 
trade. The argument between tariff protection and free foreign 
trade, therefore, opens with protection in possession, i. e. , embodied 
in the statutes and jurisprudence of the following nations, viz. : 



The United States of America 

France 

Germany 

Austro-Hungary 

Russia 

Italy 

Spain 

English Colonies 



Population. 

62,000,000 
42,000,000 
42,000,000 
42,000,000 
90,000,000 
28,000.000 
18,000,000 
9,000,000 



Total 333,000,000* 

Free foreign trade (so called) has dominated England for only 
forty years, out of the three hundred and fifty years in which 
England has had an international trade. During these forty 
years, the proportion of revenue, collected by duties on foreign 
trade in England, has been greater than in any other country, 
except the United States. Fully half the amount of revenue 
collected by England is, as we have seen, protective of the 
domestic manufacturer (of tobacco, gold leaf, and the like), 
and peremptorily destructive to the producer of domestic leaf 
tobacco. A tariff which forbids one industry, and protects another 
by a duty whose strictly protective portion is three or four-fold 
the value in foreign countries of the article on which it rests, is 
very far from being a non-interference with industry. 

Protection holds that " possession " of all countries, which is 
"nine points " not only in law but in logic. This universality of 
protection proves it to be a "natural" element in government — 
just as profit is in trade. With the same readiness with which 
we would predict that ' ' given two producers, each of whom has 
a surplus of what the other needs, they will trade," so we may 
also afiirm that, ' ' given two nations, whose people trade with 

* If to these we add the nations which would gladly enact protective tariffs if per- 
mitted by English bayonets to do fo, the list would be doubled by the addition of 
Cliina, Japan, and India. And if to these we add those countries the chief part of 
whose commercial ascendency was won under and through protective policies, it would 
add the Netherlands and Great Britain. If we add those which still practice partial 
tariff protection to home industry and armed military protection to foreign trade, Great 
Prjfain woiilcl stand chjef m\d facile princejis among protective nations. 



ALL NATIONS PUOTEOf. G07 

each other in competing commodities, each nation will seek, 
by duties, to protect its own producers in its own markets, 
to the extent of deriving a revenue from taxes on the impor- 
tation of the commodities of their rivals." Protective tariffs 
between nations whose maiiufacturers, traders, farmers, or other 
producers compete, are as natural as trade itself is between x^er- 
sons or nations whose productions differ. A free foreign trader 
can only, with the same logic, charge a protectionist with obstruct- 
ing the natural laws of trade, as a ]3rotectionist can charge every 
free trader with seeking to obstruct the natural principles of 
government. The uniform action of all other nations in 
levying protective tariffs, sustained by nine-tenths of the record 
of Great Britain herself, proves ' ' protection " to be as natural, 
inevitable, and necessary an element, in government, as exchange 
is in Industry. On a question of this kind the universal man 
knows more than the one man, and universal usage establishes 
natural law. Just as it is a law of nature that all governments 
shall practice coercion towards the disobedient, and that all 
peoples shall render homage to those in power, so is it a law of 
nature that all nations, whose people have international trade in 
competing merchandise, shall protect their own people by dis- 
criminating duties. They have always done so, and they always 
will. None should be so grateful to them for doing so as those 
whose function is criticism, since if it were possible that govern- 
ments could cease to levy protective tariffs, the function of those 
economists, who reduce criticism or fault-finding to a system, 
would, so far as this question is concerned, be gone. Those 
who live by finding fault, like those who live by finding dia- 
monds, should be grateful for what they find. 

This chapter should have made apparent to the student the dis- 
tinction between criticism as a force in society, and Policy, 
Action, Human Nature, or whatsoever we choose to call the exist- 
ing and governing social forces. The enactment of protective 
statutes I'epresent the latter, the clamor of free-trade pedants and 
theorists for the abolition of these statutes the former. 

Protection is the mountain. It is eternal. Free trade is the 
mirage. If it advances it dissolves. It can only make with pro- 
tection the same kind of an issue as the non-existing and im- 
possible makes with the universal, natural, and inevitable. It is 
a fight between something and nothing. Protection is an econ- 
omy; free t)'ade is a give-away, a waste. Protection is con- 
structive ; free trade is destructive. Free trade may be talked, 



608 ECONOMIC PmLOSOPHT. 

while one is out of office. Protection must be practiced, the in- 
stant one comes into office, or inevitable disaster ensues. 

Protection investigates, consults, harmonizes, unites. Free 
trade disintegrates, divides, slanders, besmirches, and disorgan- 
izes. Protection collects facts. Free trade is oracular, pompous, 
and issues dogmas. This chapter opened with several refresh- 
ing extracts from free-trade criticisms. It closes with a note 
containing the overweening criticism, by an English manu- 
facturer, of great wealth, eloquence, and social power, upon the 
stupidity of Americans, in pursuing that policj' which, in England, 
renders a John Bright possible.* The silent but effective answer 
to Mr. Bright's urgency that Congress should be " wise and right- 
eous" is found in the practical illustration which British free 
trade affords of wisdom and righteousness, in its career at home 
and in India, Ireland, Turkey, China, and Japan. If Americans 
had 600,000,000 of barbarians where we could train our guns 
upon them, if they demanded the right to trade with their coun- 
trymen in preference to buying of ourselves, then we too might 
aspire to teach " wisdom and righteousness '' in the English way. 
In the absence of these barbarian aids, we have to be quite 
humble. British righteousness and British wisdom, both of 
which blend in British free trade, are beyond our present reach. 

* Mr. L. U. Reavis of St. Louis recently received from Rt. Hon. John Bright of En- 
gland the following letter : 

One Ash, Rochdale, Feb. 6, 1888. 

DEA.B Sib : .... As to the disputes between labor and capital, surely your mon- 
strous tariff provokes, if it does not justify, your strikes and labor insurrections. 

If your Congress insists on burdening your whole population to give profit to your 
manufacturers, surely the workmen may as justly insist on protection to their labor. 

Whilst your tariff is in force you need not expect your workmen to be wise. Pro- 
tection, which means robbing somebody, will not content itself with enriching manu- 
facturers, but will be called in to give higher wages and shorter hours of labor to your 
workmen. 

Congress should become wise and righteous, before it can expect the artisans and 
laboring classes to make progress in that direction. 

Tours very trulj', 

John Beight. 

Me. L. U. Reavis, St. Louis, Mo., U. S. America. 



CHAPTER XV. 
Economy of Protection. 
213. How a Tariff May Protect Producers. 

DUTIES ON IMPORTS MAY PROTECT THE PRODUCERS, TRADERS, 
TRANSPORTERS, BANKERS, LAND-OWNERS AND LABORERS OF THE 
COUNTRY, IMPOSING THE DUTIES IN FIVE WAYS, WHICH ARE THE 
FIVE POINTS OF PROTECTION, VIZ. : FIRST, WHEN, WITHOUT RAIS- 
ING THE PRICE OF THE ARTICLE, THEY SHUT OUT IN WHOLE OR 
IN PART THE FOREIGN COMPETING ARTICLE, THEREBY SECURING 
TO DOMESTIC PRODUCERS THE EXCLUSIVE RIGHT TO SUPPLY THE 
ARTICLE TO DOMESTIC CONSUMERS. 

This occurs when the article is so largely produced at home 
that domestic producers are fully competent to supply it at as low 
prices as it can be imported, yet would lose a portion of their 
market if free competition from abroad were allowed. As the 
cheapness with which an article can be marketed often depends 
on the certainty of a market, it is obvious that this class of 
duties, by insuring to American producers a certain market, tends 
immediately and in the first instance to cheapness. The test of 
the cheapness of the American market relatively to the foreign is 
found in our ability to export, since no article will go abroad ex- 
cept to obtain a price higher, by cost and profits of transportation, 
than it can find at home. 

The following schedules of protected articles which we both 
export and import shows how large is the volume of merchandise, 
the duties upon which do not enchance the price in the Ameri- 
can market. Yet they protect that market, containing 63,000,000 
customers, to American producers, absolutely as to the portion 
of foreign goods excluded by these dutes, and relatively as to 
the portion admitted. Since, by the terms of the j^roposition, 
the American price is the same or lower than the foreign, tlie 
whole duty on competing goods must be paid by the foreign 
competing producei's. , 



610 



UCONOMIO PHILOSOPHY. 











Protected Products 


Value of 


lir 




^vhich we export. 


Exports. 


\ n 


Duty on Importation. 


Implements of iron, steel. 








and wood (agricultural) 


$2,976,371 


48 


45 percent. 


Pot and pearl ash 


31,363 


14 


30 per cent, to 3 cents per lb. 


Tanning bark 


97,442 


12 


Ra\v, free ; ext., 20 per cent. 


Beer, ale, and porter 


384,196 


41 


20 to 35 cents per gal. 


Bells and bronze 


26,377 


17 


3 cents per lb. 


Billiard-tables 


43,095 


23 


35 per cent. 


Blacking 


187,403 


44 


25 per cent. 


Books 


831,132 


47 


25 per cent. 


Brass and manufactures.. 


332,439 


39 


1% cents per lb. to 45 per cent. 


Bread and breadstuffs 


182,670,528 


68 


20 cents per bushel to 20 per cent. 


Bricks 


50,870 


13 


30 per cent. 


Brooms and brushes 


241,403 


50 


35 to 30 per cent. 


Candles 


226,687 


39 


20 per cent. 


Carriages, carts, etc 


1,439,003 


50 


35 per cent. 


Cars (railroad) 


1,393,059 


18 


35 per cent. 
30 per cent. 


Clocks 


1,403,363 


53 


Coffee and spices 


93,390 


44 


Free to 20 cents per lb. 


Coal 


3,693,785 
18,623 


29 
14 


Free to 75 cents per ton. 
30 per cent. 


Combs 


Copper and manufactures 


658,941 


34 


2K to 4 cents per lb. to 35 per cent. 


Cotton goods 


13,332,979 


56 


10 cents per lb. to 40 per cent. 


Drugs and medicines 


3.517,149 


59 


Free to 10 per cent, to 25 per cent. 


Dyestuff 8 


939,929 


32 


10 per cent. 


Earthen, stone, and china 








ware 


180,773 


45 


25 per cent, to 60 per cent. 
Average 40 per ceut. 


Fancy articles 


852,130 


49 


Fruits 


1,750,398 


48 


Average 40 per cent. 


Furs and fur-skins 


4,747 944 


9 


Free to 30 per cent. 


Ga.s-fixtures 


30,862 


18 


45 per cent. 


Ginseng 


483.171 


2 


Free to 25 to 50 per cent. 


Glass and glassware. . . . 


864,335 


53 


Average 45 per cent. 


Glue 


46,374 


25 


20 per cent. 


Hair 


307,133 
275,904 


24 

28 


25 to 35 per cent. 


Hats, caps, and bonnets.. 


20 to 30 per cent. 


Hay 


190,175 


29 


$3 per ton. 


Hemp and manufactures. 


735,893 


47 


$10 per ton to 40 per cent. 


Hides and skins 


1,499.737 


30 


Raw, free ; dressed, 20 per cent. 


Hops 


1,456,786 


30 


8 cents per lb. 


India-rubher goods 


510,716 


47 


25 to 30 per cent. 


Iron and steel wares 


17,571,332 


68 


Average 40 per cent. 


Jewelry 


303,245 


35 


25 per cent. 


Lamps 


350,009 


47 


40 per cent. 


Lead wares 


178,779 
8,999,627 


30 
55 


3 to 3 cents per lb. 


Leather and m'ufactureg 


15 to 30 per cent. 


Lime and cement 


100,169 


35 


10 per cent. 


Matches 


161,466 


36 


.35 per cent. 


Mathematical ins'ments.. 


599,397 


37 


35 per cent. 


Musical instruments 


1.267,450 


39 


35 per cent. 


Naval stores 


3,370,307 


53 


30 per cent. 


Oils of all kinds 


58,279,632 


68 


25 per cent. 


Powder and ball 


909,755 


45 


6 to 10 cents per lb. 


Paints and colors 


424,991 


49 


3 cents per lb. 


Paintings and engravings 


406,153 


35 


25 per cent. 


Paper and stationery.. . 


1,618,883 


55 


15 to 25 per cent. 


Perfumery 


285,000 


4"; 


50 per cent. 


Plated ware 


396,595 


47 


35 per cent. 


Printing presses and type 


211,292 


42 


45 per cent. 










fresh and salt beef, but- 








ter, cheese, milk, eggs, 








fish, lard, mutton, oys- 








ters, pickles, sauces. 








pork, onions, potatoes). 


117,765,471 


88 


20 to 40 per cent. 



SHEARMAN ON DUTIElS. 



611 



Protected Products 
which we export. 



Quicksilver 

Kags 

Rice " ... 

Salt 

Scales and balances 

Seed, hay and cotton 

Sewing-machines 

Soap 

Spirits 

Starch 

Sugar and molasses, chief- 
ly refined 

Taliow 

Tin wares 

Tobacco, cigars, etc 

Trunks and valises 

Umbrellas and parasols . . 

Varnish 

Vessels and steamers 

V negar 

Watches 

Wax 

Wearing apparel 

Wine 

Wood,lumb'r, timb'r, etc. 

Wool and woolens 

Zinc 

Uumanufactured articles 
not mentioned 

Manufactured articles not 
mentioned 



Total ^ 



Value of 
Exports. 



959.128 

11,000 

10,109 

18,^65 

304,446 

4,219,600 

2,647,515 

667,993 

1,989,038 

361,471 

1,873,182 

4,015,798 

198,608 

21,430,869 

192,952 

2,025 

187,000 

90,213 

9,846 

121,470 

32,325 

695,398 

67,000 

24,011,228 

445.431 

124,648 

1,013,900 

5,421,529 



$702,777,091 



I 8 S- 



Duty on Importation. 



10 per cent. 

10 per cent. 

]i^ to 2J^ cents per lb. 

8 to 12 cents per cwt. 

21^ cents per lb. 

20 per cent. 

4S per cent. 

20 per cent. 

$2 per gal. 

2 cents per lb. 

1 4-10 to 2}^ cts. per lb. ; 4 to 8 cts. per gal. 

1 cent per lb. 

1 to 2 cents per lb. 

15 cents to $1 per lb. 

30 per cent. 

35 Jjer cent. 

40 per cent. 

20 10 40 per cent. 

"]/^ cents per gal. 

2s"percent. 

20 per cent. 

Average 35 per cent, and 35 cents per lb. 

5 cents per pint to $2.25 per gal. 

20 to 40 per cent. 

13 cents to 50 cents per lb. 

}4 cent to •2% cents per lb. 

Average 40 per cent. 

Average 40 per cent. 



In certain of these articles, viz., sugar and molasses, iron and 
steel, wearing apparel and woolens, we import the crude article 
in a form in which it needs further manufacture, and export the 
products of the same article in a more finished form. In such 
cases the crude article bears a higher price, and the more finished 
article as low (or lower) a price, as in foreign countries. This is 
specially true of crude iron and steel, relatively to the implements 
made from them. 

American manufacturers of wares pay the whole duty on im- 
ported pig, scrap, and bar iron, and yet sell the finished products 
made of them, both here and in all foreign countries, as low as 
their foreign competitors. An acute free trader, Mr. Thomas G. 
Shearman, issued to the American manufacturers a tract explain- 
ing to them that, including the manufacturers of railroads, they, 
as a class, pay 97 to 99 per cent, of all the duties paid on im- 
ported products . The manufacturers, however, passed the tract 
over to the farmers as a means of correcting the statement, so fre- 



612 EGOmMtG PMIL080PSY. 

quently made by the less candid free traders, that the farmers pay 
the whole duty. On the whole, it was found that Mr. Shearman's 
address to the manufacturers was too strong meat for the free- 
trade propagandism. It was deemed safer to return to the ' ' sin- 
cere milk of the word," viz., that manufacturers are the cormo- 
rants, and those who buy no goods (except, at times, sugar) that 
are increased in price by the duty are their victims. 

214. W^hen Duties on Imports Protect from Taxa- 
tion. 

DUTIES ARE PROTECTIVE WHEN, BY COLLECTING A REVENUE PROM 
IMPORTERS, WITHOUT INCREASE OF PRICE ON THE THING 
IMPORTED, THEY SAVE THE BODY OF AMERICAN TAXPAYERS 
FROM TAXATION. 

Duties on imports operate protectively, in behalf of the whole 
body of the taxpayers of the country imposing them, when, with- 
out increasing the price of the commodity on which they rest, 
and hence without operating'as a tax on Amei'ican consumers in 
any degree whatever, they collect a considerable revenue out of 
the foreign producers and importers of competing products, 
thereby shielding the body of American taxpayers from taxation 
to the extent of the sum so collected. Such duties may perform 
the double function of protecting our body of taxpayers against a 
given sum of taxation, and protecting certain groups of domestic 
producers in a portion of the domestic markets. Each mode of 
protection ends exactly where the other begins, i.e., on the 
goods admitted we get a revenue paid by foreigners, which is a 
form of protection to our taxpayers against taxation. To the ex- 
tent of the goods which would come in but for the duty, but are 
excluded by the duty, we get no revenue, but an exclusive mar- 
ket for domestic producers, instead of a market divided between 
them and foreign producei^s. Both these results being, in the 
cases supposed, without increase of cost to consumers, the duty, 
as to consumers, is not a tax. In short, while free trade divides our 
American markets between our producers and the foreign, and 
leaves us to pay the entire duties, protection divides the burden of 
paying the duties between American producers and the foreign, 
and leaves the former to enjoy the whole American market. 

SCHEDULE OP DUTIES WHICH CAN NOT BE CHARGED OVER WHOLLY 

ON CONSUMERS. 

Below is a schedule of articles which we both export and 



now DUTIES a:ffegt peices. 



613 



import, and which, thei'efore, must preserve very nearly like 
values at home and abroad. I do not say exactly like values, 
but I affirm that the values can not vary much, since the 
grades we export under each name must be enough higher 
abroad than here to pay for exportation, and the grades we im- 
port must be pi'oducible, enough cheaper abroad than here, so 
that when tlie foreign producer has added his share of the duty 
to tlie cost of his production, he will still usually have a margin 
of profit. But if one gi'ade of a given article is higher priced 
liere tlian abroad, while another grade of the same article is lower 
priced, both and all grades of that ai'ticle can not keep very far 
from equivalent values in the two countries. 

In the case of every article included in this schedule, there 
arises an irresistible presumption from the fact that the article is 
in some form and degree one of export, that prices being about 
at a level in the two countries, a veiy considerable portion, or the 
whole of the duty, is paid by the foreign producer. Tliat pre- 
sumption needs, however, to be tested in each case, in conform- 
ity with a principle which will be stated and if proved, fui^nish 
a substantial proximate rule, more accurate than has hitherto 
been in use, for calculating the portion of revenue paid by 
foreigners. 

Tlie following- is tlie schedule : 



Articles which we both Export and Imjmrt. 



Beer, ale, and porter 

Books, blank-books, and music. . 

Brass (manufactured) 

BreadstufEs, grain, and rice 

Bricks and tiles 

Bristles, bruslies, and brooms 

Candles and tapers 

Carriages, and parts of 

Cliemicals, drugs, and medicines 
Clocks, watches, and parts of . . . 

Coal .. 

Coke 

Cocoa, coffee, and substitutes for 

Copper, chiefly crude 

Cotton goods 

Cliina and eartlienware 

Fancy articles 

Fisli (exports $4,187,338) 

Fruits and nuts 

Furs and manufactures of 

Glass" " 

Hair " " 

Hats, bonnets, and hoods 

Hay 

Hemp and manufactures of 

Hides and skins 



Imports. 

1882. 



!937,806.59 
,002.696.76 
668,136,35 
,478,596.33 
153,033.33 
,547,81329 
6,678.00 
140,422.57 
,161,115.97 
,039,647.97 
,192,689.23 
53,244.03 
60,615.50 
317,172..34 
,985,306.49 
,873,075.95 
6.54,978.88 
,332,017.37 
1,047,937.22 
216 333.19 
7.53,537.11 
831.085..32 
,026,248.77 
891,.520.35 
382,386.48 
,702,970.61 



Bevenue. 
1883. 



$417,202.09 

745,402,30 

180,315.87 

4,152,827.36 

34,705.99 

330,976.14 

1,586.93 

49,174.92 

4,981,453.14 

804,483.89 

621,099.25 

13,311.01 

4,026.96 

109,496.50 

12,227,103.04 

2,965,978.84 

3,913,245.05 

414.915,63 

4,427,135.45 

1,135,129.91 

3,847,28.661 

228,317.91 

41.3,211.41 

153,196.07 

2,414,080.50 

4,992.00 



614 



ECONOMIC PH1L080PHT. 



Articles which we both Export and Import. 



Hops 

India-rubber goods 

Iron and eteel, and manufactures of 

Jewelry (not in ( iamonds and watches). 

Lead, and manufactures of 

Leather " " 

Lime 



Marble (exports $614,400) 

Matches 

Metals, bronze, German silver, nickel, platina, 

britannia, etc 

Musical instruments 

Oils, Mineral, etc 

Animal 

Vegetable, fixed 

" volatile 

Gunpowder and fulminates 

Paints and colors 

Painting and statuary ... 

Paper, pulp, and manufactures of 

Pens and pencils 

Perfumeries 

Pickles, capers, and sauces (exports $25,635) . . . 

Potatoes 

Provisions (bacon, beef, butter, cheese, eggs, lard, 

meats, milk, etc) 

Saddlery 

Salt 



Sand 

Seeds (flax, hemp, garden, etc) . . . . 

Soap 

Spirits and wines 

Starch 

Stone, other than marble 

Straw 

Sugar and molasses 

Tallow 

Tar and pitch 

Tin cans and manufactures 

Tobacco, cigars, etc 

Umbrellas, parasols, and materials. 

Varnish 

Vegetables •. 

Vinegar 

Wax 

"Wood, lumber, timber, etc 

Wool 

Woolen manufactures 

Zinc 



Total. 



Imports. 
1882. 



288,344.00 

300,445.65 

53,998,266.74 

398,796.44 

211,934.99 

12,215,203.48 

36,878.99 

575,144.60 

2,233.95 

1,429,918.17 

1,514,762.43 

29,625.00 

102,873.18 

868,201.58 

300,975.77 

2^3,822.25 

1,217.407.35 

2,574,815.91 

2,011,645.21 

209,909.73 

500,867.08 

350,444.22 

4,656,368.50 

2,046,533.27 

157,565.09 

1,561,131 .74 

23,640.00 

1.455,175.18 

316,061.49 

9,453,593.49 

82,672.68 

223,397.96 

41,683 37 

94,523,797.29 

6,469.50 

27,608.75 

8,216,132.12 

83,354.00 

112,781.29 

1,182,203.60 

26,030.60 

6,455.95 

8,967,290.69 

10,333,358.54 

37,284,823.88 

949,041.92 



$415,759,545.00 



Revenues. 
1882. 



69,964.64 

97,293 65 

24,196,037.62 

99,862.22 

126,301.70 

3,794,564.62 

3,687.90 

354,165.54 

• 781.88 

425,188.24 

455,040.0s 

6,001.00 

21,157.23 

389,800.56 

98,186.60 

9,542.08 

411,331.52 

262,270.86 

689,041.32 

129,685.94 

302,415.57 

122,673.03 

1,318,246.35 

434,545.34 

55,147.78 

715,243.13 

2,364.00 

281,696 24 

143,495.45 

6,789,023.04 

73.276.28 

52,192.83 

13,477.57 

49,216,335.56 

733.05 

5,521.77 

67,681.34 

6,047,560.09 

41,628.60 

52,759.24 

223.006 96 

11,342.39 

1,421.00 

1,697,431.91 

3,856,678.06 

25,439,102.52 

377,159.01 



$174,562,630.98 



It appears, therefore, that out of the total of $505,491,966.66 of 
imported goods paying duties in 1882, four-fifths, or $415,759,- 
545, are goods, some forms and grades of which we export to 
the amount in all of about $700,000,000, which was shown by 
the first schedule to be the amount of our protected ex- 
ports ; also, that out of a total of $215,617,669.62 of revenue 
collected on impoi^ts, an irresistible presumption arises that 
a like proportion of four-fifths, viz., $174,562,630.98, is either 
not chargeable over upon American consumers at all, or 



DISPLACma WITHOUT INCREASING. 615 

is divided so that a definite and large portion of it is not so 
chargeable. 

IN CASES WHEREIN THE IMPORTATION DISPLACES A PORTION OF 
AN ALREADY SUPERABUNDANT SUPPLY THE FOREIGN PRODUCER 
PAYS THE WHOLE DUTY, 

Among the articles, on which the duty is not chai-geable on 
the American consumer in any degree whatever, are breadstuffs, 
coal, fish, hay, paper, potatoes, provisions, sand, starch, stone, 
straw, tallow, tar, and pitch, vegetables, vinegar, and wood, 
lumber, and timber. In breadstuffs the import for 1882 was 
$16,478,596.33, almost exactly one-hundredth as much as our 
domestic production, which for 1881 (short crop) was worth 
$1,570,248,541, and one-eleventh as much as our exports, viz., 
$182,670,528, The American pi'ice was fixed by the ratio of the 
whole demand upon America, foreign and domestic, to the whole 
available supply. If European sources of supply and demand a}"e 
included, the driblet from Canada which constitutes our importa- 
tion would be one part in 250. If American sources only are 
counted it would be one part in 100. But when we are sending 
abroad eleven times as much breadstuffs as we import from Can- 
ada, it is obvious that the importation from Canada simply dis- 
places its equivalent in American breadstuffs, increasing by so 
much our national surplus for export. Hence Canada, being 
nearer the point of demand than our far West producers, lessens 
by so much the quantity of American produce that can find 
market. The degree in which it lessens the quantity of our own 
far West breadstuffs, that can profitably be marketed, exactly 
offsets the addition it makes to our exports. It is like a pint of 
water, jDoured into a barrel of water that is already running over. 
It effects no change of level, nor increase in quantity, but only a 
substitution of atoms in an unchangeable quantity. 

Plainly the import of breadstuffs from Canada exerts no influ- 
ence whatever over the American price, but merely displaces 
part of our American product, partly by lessening the quantity 
marketed, and partly by increasing the quantity exported. 

A Canadian can not, on bringing his wheat into our market, if 
our wheat is selling at $1.25, say : "I want $1.45 for this wheat, 
because I had to pay twenty cents a bushel import duty." He 
must sell for the American price. He need take no less, and he 
can get no more. Hence, if he pays a duty, it figures merely as 
an additional item in his cost of production, i. e., a deduction 



616 ECONOMIC PHILOSOPHY. 

from his profits, just as if it were a sum paid for phosphates or 
manure. 

The opposite theory would involve the absurd corollary that 
all the breadstuffs produced in the United States, though one 
hundred times as great in quantity as the trifles imported from 
Canada, mxist have been made twenty per cent, higher by the 
mere duty on this importation from Canada, or that a tax of 
$312,000,000 could be imposed on consumers of American bread- 
stuffs, and paid over to American farmers, as the consequence of 
collecting a twenty-five percent, duty on $16,000,000 worth of 
breadstuffs coming in from Canada and going out to Europe. 

Hence, we have to admit that the whole duty collected on 
breadstuffs, entering the United States from Canada, is paid by 
the Canadians. Here, therefore, is a saving to the whole body of 
American taxpayers of $4,152,827.36 per year, through the duty 
on imported breadstuffs. No American resident, citizen, or tax- 
payer pays one cent of this revenue in the form of increased 
price. Yet, as the Canadian is seen to pay it into the Treasury, it 
is necessary to prove that the American price is increased by the 
amount of the duty, in order to escape the conclusion that the 
Canadian sustains the final burden of the tax. 

Of coal, we import $2,192,689.23 worth, against an export twice 
as large, and against a production of $94,287,923. Every ton im- 
ported is, therefore, a displacement of a portion of domestic prod- 
uct, partly by diminishing the quantity of the latter which can 
be profitably marketed, and pai^tly by compelling a portion of 
the latter to be exported. Neither of the processes tends to lower 
or raise the price, since in both cases the importation only dis- 
places a portion of the domestic supply without increasing the 
aggregate supply. By so much as the importation from Nova 
Scotia is more, the domestic product will be less. All the facts, 
which make the duty on breadstuffs a collection of revenue ex- 
clusively from foreign producers, apply to coal. Hence, of the 
$621,099.25 annually collected on coal not one cent is collected 
from American consumers of coal. 

Lumber and manufactures of wood are exported from the 
Northwest, i. e. , from Michigan, Wisconsin, and Minnesota, into 
Western Canada and Manitoba, to the amount of $2,475,636 an- 
nually, thus showing that it is cheaper in the Northwest than in 
any part of Canada. It is imported from the Ottawa district of 
Canada into New York and New England to the amount of 
|8, 967, 290. 60, thus showing that it is dearer in New York and 



COMPETITION REPEALS THE " TAX." 617 

New England than in most parts of Canada. Finally, we ship 
from our ocean points upwards of $24,000,000 worth to foreign 
countries. The total value of our lumber product is $233,268,- 
729, or say thii-ty times as much as we import, and our importa- 
tion is less than one-third of our export. 

Here again the Canadian gets the American price ; his impor- 
tation is a displacement, partly felt in diminishing our domestic 
product, and partly in increasing our export. Hence the $1,697,- 
431.91, collected from Canadian lumber producers, protects the 
body of our taxpayers from just so much tax which they would 
otherwise have to ^scy. 

Summing up the revenue derived from the articles on which 
the importation serves clearly only to displace a small portion of 
our domestic production, partly by lessening the portion of our 
domestic product that can be profitably marketed and partly by 
forcing another portion to be exported, we find that on these sev- 
eral articles, viz., breadstuffs, coal, fish, hay, paper, potatoes, pro- 
visions, sand, starch, stone, straw, tallow, tar and pitch, tobacco, 
vegetables, vinegar, wood, lumber, etc., we collect duties from 
foreign producers to the amount of $15,919,878.03, apparently 
without a possibility of any tax on the American consumer. 

215. When Protection Promotes Production. — The 
third class of cases, in which duties on imports operate protec- 
tively, is when, being imposed on articles of which the American 
production is inadequate to supply the American demand, they 
enhance the price sufficiently to stimulate the production up to a 
condition of adequacy to supply the demand. When this point 
of adequacy of domestic supply is reached, domestic prices will 
have fallen to a dead level with foreign prices. While the 
domestic production is rising toward this condition of adequacy, 
the enhanced price, or " tax " occasioned by the duty, lessens pari 
passu with the approach of the domestic production toward ade- 
quacy to supply the domestic demand. In no case, therefore, 
whei'e there is a large domestic production, can the domestic price 
stand as high as the foreign price with the duty added. 

If the law, by which the duty recedes from its full effect on 
the price, could be reduced to mathematical certainty, an exact 
count of the temporary cost of protective duties, and an account 
current of this cost against their pi'ofit in enhanced production 
and increased internal ti-ade, could be arrived at. 

But fluctuations in markets greatly embarrass it, and down to 
the present time the Governnaent of the United States has neg- 



618 ECONOMIC PHILOSOPHY. 

lected to collect such statistics as would furnish most aid in 
establishing the universality of such a mathematical formula. 
It has to be left to sound business judgment. 

Upon no point are the American people so ill-informed, and so 
subject to imposition on the part of the unscrupulous, as on that 
of the relative prices of consumable commodities of nearly all 
kinds in Europe and in America. 

Subject to variations, which may be separately noted, the proxi- 
mate J.aw of the receding effect of duties under an increasing do- 
mestic production is that, pari passu as the domestic production 
becomes adequate to supply the demand, the tariff tax declines. 

For instance, on crude sugar we import ten-elevenths of our 
supply. Presumptively, therefore, ten -elevenths of our duty, on 
the raw materials or forms of our sugar, falls as a taxation on 
our manufacturers and refiners of sugar. The existence of an 
export of refined sugar, though only to the extent of one-fiftieth 
in value of our importation of crude sugar, would suffice to 
prove that prices are as low in our markets as abroad, were it uot 
that the expoi't is aided by payment of a rebate of the duty 
collected on the importation of the crude sugar used in its manu- 
facture. In fact, however, refined sugar has at times been lower 
in the United States than abroad, and is usually higher by only a 
third or half the duty. To this exteiit the tax is continued against 
our consumers. The assumption that raw sugar is taxed depends 
also, for its truth, on the condition that the repeal of our duty 
would cause no change in the tariff ]3olicy of the countries which 
sell us the sugar. If, however, they should put on an export tax 
simultaneously with our taking it off, as Brazil and China did on 
the occasion of the repeal of our duties on tea and coffee, then we 
would be simply presenting to foreign nations our present sugar 
duties, amounting to about $50,000,000 annually. 

Collateral causes other than the tariff, such as patents, which 
limit the competition among domestic manufacturers, may con- 
spire to prevent prices receding, under domestic competition, in 
the degree our rule calls for. The history of steel rails may illus- 
trate. When they were altogether supplied from abroad, neither 
duties nor patent monopoly were much complained of. The price 
was so high that even the duty of $28. 50 per ton was only equiv- 
alent to 30 per cent, ad valorem, though the fall in price so raised 
its ad valorem rate that had it continued it would have become a 
duty of 100 per cent. In 1864 as high as $375 in currency was j)aid 
for steel rails. In 1883 our demand had expanded to 1,912, 93X 



Whole duty, ) 


{ TariflP 


$28.50 J- 


: ] Tax, 


per ton. ) 


( $3.16 



" GEO WING RICH AS TAXES RISE." 619 

tons annually, under reduced prices and expanded production, 
and we ourselves produced 1,688,794 tons a year, leaving only 
224,057 tons to be imported. If the law of receding tax had 
worked unfettei'ed, it should have resulted as follows : 

Whole demand, ) { Deficit, ) 
1,912,921 \ : ] 224,057 > ; 
tons. J ( tons. ; 

In short, in 1882, in view of the ratio of our domestic produc- 
tion to our importations, the price of steel I'ails should have 
been only $3.16 per ton higher in America than in Europe, 
whereas it was from $15 to $18 higher, the duty being then 
$28.50 per ton. This failure of the price to recede, at an equal pace 
with the expansion in the domestic production, was due to the 
patents which limited the right to manufacture here to eleven 
companies, all acting under one arrangement as to their patents, 
and whose patents continued to run after the English patents had 
expired. Had there been no patent monopoly, i. e. , had all Ameri- 
cans been free to make Bessemer rails after 1870, it is probable 
that forty instead of eleven makers might have competed. In 
that case the American price might not have been higher than 
the foreign price by more than the ratio assigned, $3.16 per ton, 
plus freight and charges. Still the fact that America is the 
ultimate market, for consumption, of about as many rails as all 
the rest of the world combined, necessarily causes iron and steel 
rails to tend toward higher prices in America than elsewhere. 

The duty recedes from its effect, as a tax, in proportion as the 
domestic production becomes adequate to supply the domestic 
demand. Hence the portion of the duty which is a tax on 
domestic consumers, bears always the same proportion to the 
share which is paid by foreign producers, as the deficit in the 
domestic supply bears to the whole domestic demand. If this 
law be applied to the foregoing schedule of duties, to the amount 
of $174,562,630.98, it will furnish us with the fairest standard 
for ascertaining the gross cost of protective duties, in the first 
instance, i. e. , before offsetting the profits which ensue to the 
country at large from enhanced production, and the increased 
prospei'ity of all kinds of industries. The problem which has 
excited the candid wonder of many ingenious persons is. Why, 
under protective duties, do we gi'ovv rich in just the degi'ee 
that taxes are high? The secret of the puzzle is that foreign 
producers pay so large a share of the duties that American 



620 ECONOMIC PHILOSOPHY. 

consumers actually are presented in part with their im- 
ported commodities. This is, in part, why Chancellor Bis- 
marck attributes the unwonted prosperity of America, during the 
twenty-three years past, to the only operative cause peculiar to 
that period, as compared to other pei'iods, viz. , our protective du- 
ties. It will also both explain and justify the fact that the last 
English work on political economy, by Professor Henry Sidg- 
wick, of Cambridge University, says (p. 576) : '''It must he ad- 
mitted that the imposition of import duties is, imder certain cir- 
cumstances, a method at least temporarily effective of increas- 
ing a nation''s income at the expense of foreigners. " 

In stating, as a proximate rule for estimating the decline in the 
tariff tax, which results from the advance in the domestic pro- 
duction, that, pari j^assu as the domestic production becom.es ade- 
quate to supply the domestic demand, the tax declines, I use the 
word proximate in its broadest sense. For instance, while the 
American manufacture of silks now supplies the country with 
about one-fourth of the silk worn in this country, the deficit 
being still three-fourths, the rule above set forth would require 
that the current selling American price should be one-fourth of 
the duty below the French price with duty added, supposing the 
French price itself not to have been reduced by the American 
manufacture. In short, that the current American prices ought 
to be three-fourths only of the French price, plus the duty. This 
is not far from the fact. French manufacturers several years 
ago refused to fill American orders except through their New 
York houses. They alleged as the reason that, if they should sell 
to American customers at current French prices, the latter, on pay- 
ing the duty, would find the American price so much lower than 
the French price with duty added, that they could not sell at all. 
This is only another mode of saying that the French producers 
of silks are paying a portion of our revenue. The formula I have 
given would fix that portion proximately at about a fourth of 
the price ; which, if the duty be 60 pei* cent., would be two-thirds 
of the duty. The accidents of trade might cause this to fluctuate 
between a tenth and three-tenths, and differently on different 
kinds of silks, according to the degree in which our domestic 
manufacture is superseding the French, in each kind, in our mar- 
kets. The actual law which determines the price being the 
ratio of the whole supply, foreign and domestic, to the whole 
demand, domestic and foreign, it follows that the recession of 
price must bear a permanent relation to this greater equation, 



HIGHER DUTIES MAKE CHEAPER CROCKERY. 621 

and only a subordinate relation to the less one of the ratio of the 
domestic to the foreign supply. Still, if a competent government 
investigation were made, I think it would prove that for several 
years past the American price for silks has been from one to 
three tenths below the French price and duty, thus, in effect, 
showing a payment by the French silk manufacturers of from 
two to four tenths of our revenue from silks. 

English nianiifacturers of cutlery and crockery also make dif- 
ferent price lists to American customers from those they sell at to 
Austi'alian and to English, putting their product enough lower 
here than elsewhere, to virtually pay as much of the American 
duty as they can afford to pay, without losing their entire 
profit. 

In crockery the proximate rule above given v is borne out 
with essential accuracy. The American manufacture produces 
about $5,000,000 woi-th a year, as against an importation of about 
$7,000,000 worth. Our total annual consumption being $12,000,- 
000, and our domestic production having become adequate 
to supply five-twelfths of the demand, it ought to be found that 
our foreign competitors are bearing five-twelfths of the tariff 
tax. As the effect of a duty is partly to raise prices in the coun- 
try imposing it, but partly also to depress prices in the country 
producing the product on which it is imposed, a comparison of 
present relative prices in the two countries is not always more 
satisfactory than a comparison of present prices with past prices 
in the same country. Davenport & Bro., a New York import- 
ing house in crockery, china, and earthenware, report that in 
1852 a crate of assorted crockery would sell to the American con- 
sumer at $95.30, under the 30 per cent, duty, and a like crate 
sold in 1883 under a 50 per cent, duty, at $57. 80. The goods had 
sold 67 per cent, higher under a duty 40 per cent, lower. The 
books of Oscar Cheeseman, another importer and jobber of 
crockery in New York, show that assortments of crockery which 
sold for $108.68 in 1860 under a 24 per cent, duty sold in 1883 
under a 50 per cent, duty, for $63.81. Although the duty has 
since been raised to 60 per cent. , inquiry of these firms shows 
that the goods in question sell very much lower now than when 
these statements were made. 

Nine heavy firms of dealei-s in plumbing and sanitary hard- 
ware in New York cei'tified, in the winter of 1882, that the prices 
on their class of earthenware wei'e 40 per cent, lower then than in 
1873, when the business of their raanuf9,cture was first undertaken 



622 ECONOMIC PHILOSOPHY. 

in this country, though the currency in which these prices were 
stated was worth 33 per cent, more in coin in 1882 than in 
1872. They say: "We are of the opinion that the manufacture 
of these goods here has been the main cause of this reduction, and 
also tliat the development of home manufacture has always the 
tendency to reduce j)rices to the consumer." In crockery, there- 
fore, 40 per cent, increase in the duties has caused the Ameri- 
can production to expand until it supplies five-twelfths of the 
American demand, and has reduced the net price to American 
consumers by a percentage greater than the whole duty. With- 
out this reduction in price, the annual consumption for which we 
now pay $12,000,000 would have cost us $19,200,000, an annual 
saving of $7,200,000, which is more than the invoiced value of all 
that we import, viz. (for 1882), $6,873,075.95. In view of such 
facts, and of the fierce struggle made by foreign potters to hold 
the American market, it is safe to say that of the revenue col- 
lected on pottery, viz. $2,965,978.84, one-half has been paid by 
the importers, and only one-half by the American consumers. 

Certain newspapers, in 1868-70, denounced the duty on paper 
as a tax on knowledge. The fear that knowledge was going to 
be taxed, so great was their stock on hand, naturally made them 
"fast and furious." 

The tax on "knowledge" was continued, with the gratifying 
result that knowledge so increased, on all hands, that most of 
those who had not known that the duty on paper helps to make 
it cheap, instead of dear, found it out. The facts are, that the 
United States makes 535,000,000 pounds of paper annually,* 
while Great Britain makes only 350,000,000 pounds, so that our 
supply is slightly greater per capita than the English. They 
could only have more for export, than we, by using less. As 
recently as 1873, we imported foreign paper to the value of $580,- 
000. In three years the importation fell to $20,000. At the same 
period our export, which in 1869 was only $3,650, grew, in seven 
years, to $810,000, and in 1882 was $1,618,883, while our imports 
of materials for making paper grew to $6,024,772.63. In paper, 
therefore, we became importers of the raw materials and ex- 
porters to fifty-one countries of the finished product of all grades, 
England being our largest purchaser, and the British possessions 
in Africa one of our smallest, because little paper is used there. 

Since 1883 our imports of paper have gained slightly on our 

* Census of 1880. 



HOME MABKET8 FIRST . 623 

exports, but the domestic pi'oduction is sixteen times greater than 
the importation. According to our formula, it is sixteen-fold 
moi'e potential in securing permanently cheap paper. Though 
the paper manufacture maintains a larger supj)]y, and in most 
grades at as low prices as the English, an assault along its lines 
under a system of low duties would shatter it in all its parts. 

The conditions relating to hosiery and dress-goods, of all except 
the extremely expensive kinds, resemble those above outlined 
as to crockery. The revenue on these, therefore, is divided. Mr. 
Marshall Field, the leading importer and dry -goods merchant of 
Chicago, stated in 1882 that in all ordinaiy woolen and cotton 
goods, for common wear by the business men and working classes, 
the American market (though surrounded by an average 45 
per cent, tariff) is the cheapest market in the world. Six- 
sevenths of the goods of this class consumed here are now made 
in America. Our cotton sheetings and cotton prints are selling 
in Manchester and Liverpool, as well as in every port on the 
globe. It does not follow that they are not helped by protec- 
tion, for our duty secures to our cotton producers an exclusive 
American market, in addition to whatever foreign markets may 
be open to them. h. large trade makes a low price. 

If the principles above outlined be applied to our entire tariff 
list, it would show that, of the $212,000,000, or less, of duties on 
imports usually collected, the proportion collected from foreign 
producers and not chargeable over to American consumers varies 
with the fluctuations in the state of foreign and domestic prices, 
never coming below $40,000,000, and seldom, perhaps, rismg 
above $60,000,000. 

Few writers are more passionately British, or more dogmati- 
cally indifferent to facts, than Mr. Mill. By some fortuitous 
accident, however, he did make the discoveiy, which he thus 
candidly admits (vol. ii. p. 457): "Those are, therefore, in the 
right who maintain that taxes on imports are partly paid by 
foreigners." His application of the principle in practice shows 
less knowledge of the laws and conditions of trade than would 
be expected. 

216. Protection Promotes Wages. 

The fourth mode in which duties on imports operate to 
protect the industries op the country" imposing them is 
when, by increasing the number of occupations and en- 
terprises that can be carried on within a country to 



624 ECONOMIC PHILOSOPHY. 

THE PROFIT OF THE MAN WHO RISKS HIS CAPITAL IN THEM 
(THE "entrepreneur"), THEY INCREASE THE FULLNESS AND 
DIVERSITY WITH WHICH THE NATURAL RESOURCES OF A 
COUNTRY ARE DEVELOPED AND USED, THEREBY CAUSING MORE 
EMPLOYERS TO COMPETE FOR THE HIRE OF LABOR, AND SO 
RAISING THE RATE OF WAGES, OR THE NUMBER OF WORKERS 
THAT CAN FIND WORK AT THAT RATE, OR BOTH. 

I have shown that no duty can increase the price, if it rests on 
the importation of an article of which our domestic production is 
adequate to supply the demand. Such is the case of wheat. 
If the duty raises the pi-ice, without starting the domestic pro- 
duction, it is a revenue duty, since the whole duty paid goes to 
the treasury, and there are no domestic producers to protect. 
Such is the case of tea, and such, until recently, was that of silk 
goods. The duties which are pi'otective are limited, therefore, 
to those which are stimulating a domestic production not yet 
adequate to supply the domestic demand. If there are fifty or 
five thousand such that enhance prices, that means that there 
are fifty or five thousand new sets of employers competing with 
each other for the hire of labor, ivho ivould not be in this com- 
petition for the hire of labor, were it not for those particular 
duties which are thus enhancing prices. Suppose a new 
country like Australia has hitherto imported clothing, and had 
but five occupations, viz., raising sheep, shearing sheep, trans- 
porting wool to market, and importing and selling clothes and 
groceries for the wool-growers. If the protective dvities on 
woolen goods start the occupations of scouring, dyeing, spinning, 
weaving, and tailoring, the number of occupations will be in- 
creased from five to nine, and the number of competitors for the 
hire of labor in like proportion. At least, the degree of competi- 
tion for the hire of labor, which was caused abroad by the manu- 
facture of the cloth abroad, will be transferred to Australia, and 
added to the previous competition for the hire of labor there, 
together with the added competition involved in building the 
new factories and introducing machinery. 

Labor obtains employment, only on condition that the employer, 
or enterpriser, can sell the product of the labor at a profit, after 
paying wages and the interest on his capital. An enterpriser or 
employer is generally a man or corporation who borrows his 
capital. In this country it is so usually true, that the enterprisers 
keep the workers busy, that workingmen fall into the habit of 
thinking that work comes by some inevitable necessity like sun- 



THE MEN WHO RAISE WAGES. 625 

rise or the tides. Many workingmen imagine that it is the great 
corporations and employing capitahsts who cause their wages to 
be as small as they are, rather than that it is to these that they owe 
the fact that they can earn any wages at all. But, in fact, it is 
the competition of the enterprisers with each other that advances 
wages. It is the extent and number of the enterprises that can 
be made profitable, that increases the competition of the enter- 
prisers, and protection determines the extent and number of the 
enterprises that can be made pi-ofitable, when such enterprises 
have to be begun against the competition of older, or stronger, 
foreign competitors. Without protection, therefore, American 
labor cannot at present, as against foreign labor, be kept fully 
employed. With adequate protection at all points it can. Nothing 
else can do it ; for where the " boss " cannot make a profit, labor 
must go out. India and China ai'e examples of countries where 
the enterprisers are far behind the labor supply, because every 
man who gets a petty competency suflRcient to cover his wants for 
the rest of his life stops work. They have not there the great 
corporations, large fortunes, and vast "monopolies," as we call 
them, which have distinguished Roman, English, and American 
civilization, because they have not the same ]Jower of combination. 
Hence their wages of labor ar-e low — two or three cents a day. 
For in order that there may be an exhaustless demand for the 
labor of wages- workers, there must be an exhaustless ambition in 
those who can employ. Apart from the greed of the competent, 
there can be no relief to the need of the incompetent. Not only 
does the wage- worker, who feels that he has got enough, stop 
working, but the capitalist who discovers that he has got enough 
stops investing, and to cease investing in new enterprises is to 
cease employing new men. Hence what the poor most need, in 
any country, is men able to employ, i.e., rich in jDresent means, 
and who never know when they have got enough, and in fact 
never get enough. The curse of China and India, which keeps 
them poor and at famine's verge, is, that so little capital satisfies 
their money-making men, and retires them from the field of en- 
tei'prise. Millions compete for employment, but no emploj^ers 
compete for labor. The surplus capitals of the rich, employed in 
reproduction, and comj)eting with each other for the labor of the 
unemployed, are the cause of rise in rates of wages. Wealth not 
needed for present consumption, and thei'efore invested in build- 
ing houses for I'ental, causes rents to fall. Wealth to lend lowers 
rates of interest. 



626 ECONOMIC PHILOSOPHY. 

The whole cost of all commodities and enjoyments resolves 
itself finally into one or another of three forms of corapensation 
for labor, viz. : 1. Wages of labor, which covers merely the cost 
of employing all those workmen whose toil perfects the com- 
modity, and perfects each raw material that enters into the 
commodity, after others have supplied the capital, including the 
land, and undertaken the risk essential to the creation of the raw 
material and the employment of the labor. 2. Profits of enter- 
prise, which are the compensation for the risk of loss of the 
whole capital involved in the undertaking, and for that form of 
labor, care, and courage which assumes the risk of the demand for 
the commodity, when it shall be brought into existence, being suf- 
ficient to compensate for the cost of production, on sale of the 
commodity in open competition with all others who produce it, 
and to leave a margin of profit. This compensation or profit 
amounts to the whole excess, of the returns created by the demand, 
over the cost of production, including wages, rent, interest, and 
capital sunk. 3. Interest and capital, which, in the case of 
created capital, is the compensation for the use of labor previously 
hoarded or stored in commodities. In the case of land (rent) it 
is the compensation for the use of labor previously hoarded, or 
stoi'ed, in the form of the sum paid on the purchase of land, for 
the value which it has derived from the aggregate movement of 
society, i.e., from its nearness to centers of social and industrial 
movement. In some cases, in cities, this value arises from its 
having been withheld, at considerable cost, for interest and taxes, 
from the inferior uses which would have lessened its value. 
Thus wages, rent, profit, and interest, are all but differing forms 
of compensation for labor — i.e., of wages. The price of com- 
modities is but wages, some of which are once, some twice, and 
some thrice removed. So much of the price, as was paid in wages 
for the last process of production, is evidently wages. For in- 
stance, in making pig-iron the census returns but a fifth of the 
cost as being paid for wages, i.e., for evident wages, or wages 
of the last process involved. The ore, lime, and coal are raw 
materials, and a large element in the cost of these is labor, or 
wages, of production and transportation. The furnace, and fund 
from which wages are paid till the iron is marketable, are 
counted as capital, but these are only past labor stored, in plant 
and money. All capital, rent, interest, and profits therefore 
resolve themselves finally into wages. If they are not wages in 
the first instance, they are wages paid for the abstinence from the 



HO IF D UTim PROTECT WA GE8. 627 

IDleasures of consuming' previous wages. Or if there has been 
no abstinence, but only irfv^ention and enterprise, in perceiving 
avenues to wealth where others failed to see them, then the 
px'ofits of such inventive energy or enterprise are the wages 
which society justly awards to the man who can teach it what is 
both new and valuable. There are no sources of value save 
in labor and the desire of that which labor obtains. 

If, therefore, there are 1,500 protective duties affecting prices, 
there must be 1,500 domestic productions inadequate to supply the 
domestic demand. Hence there must be 1,500 nuclei of industry 
at which new employers are bidding against each other for the 
employment of workmen ; hence 1,500 centers of increased de- 
mand for labor from which higher wages for labor radiate on 
every side ; hence 1,500 centers of enterprise where capital is at 
risk for new profits, labor is making new products, rents and 
raw materials and wages are rising, and the prices of the finished 
product are falling. The statistics which prove the increased 
employment of labor and higher rates of wages in the United 
States under protection than under low duties are simply endless. 
Free traders try to ascribe the higher wages existing in this 
country to land, climate, inventive sagacity. But there was 
more land, and it was more fertile, in our colonial period than 
now, and yet labor was then worth but a shilling a day ; luxuries 
now common to the poor were then rare among the rich. Our 
climate merely rivals, without excelling, that of Europe, and in- 
ventive sagacity stores itself into machine power, of which En- 
land has rather more than we, the product of three hundred years 
of protection. High wages are due to such an organization of 
iiadustries as keeps the whole people employed, and to attain the 
greatest possible diversity we must not only tolerate those which 
we cannot avoid having, but we must insist on having those 
which, at the outset, free foreign competition would be both in- 
terested and able to destroy. And we must do this honestly, in 
order to multiply the JBelds of employment for labor, and keep 
wages at the maximum, so far as human legislative effort can. 

217. Protection Promotes National Unity and Peace. 

DUTIES ON IMPORTS PROTECT THE DOMESTIC INDUSTRIES OF THE 
COUNTRY IMPOSING THEBI WHEN, BY BRINGING INTO EXISTENCE 
AND DEVELOPING INTO A CONDITION OP SELF-SUSTAINING PROFIT 
INDUSTRIES ESSENTIAL TO AN ACTIVE INTERNAL COMMERCE 
DURING PEACE, AND TO THE NATIONAL DEFENSE DURING WAR, 
THEY INCREASE THE PROBABILITIES OF BOTH DOMESTIC AND 



628 ECONOMIC PHILOSOPHT. 

INTERNATIONAL PEACE, AVERT OR GREATLY MODIFY FINANCIAL 
CRISES, AND RENDER WAR LESS FREQUENT AND LESS EXHAUSTING. 

The Cobden Club adopts as its motto, ' ' Peace, good will among 
the nations," * but every sunrise is announced by the reveille of 
English drums, awakening English soldiers to back with the 
bayonet some new intrusion on the rights of barbarian races, in 
order to secure to British factories the profits of selling breech- 
clouts and wooden gods to some new tribe of heathen, to the 
prejudice of the local manufacture. Ten thousand Englishmen 
were slaughtered in 1884 in the Soudan as part of this pro- 
gramme. England has her nose in every quarrel on the face of 
the earth. She is not wholly out of war one month in twenty- 
five. Indeed, it is doubtful if she has been at absolute peace for 
a day since 1846. Free-trade in men and in commodities was the 
war-cry of our Southern Eebellion. It cost us one million lives 
and ten thousand million dollars. It had its face set backwards 
towards feudalism, baronialism, paucity of employments, poverty 
of laborers, the lash as legal tender for a day's work, civil war as 
a substitute for economic discussion, caste instead of currency, 
bullets instead of banknotes, and bullying in place of statesman- 
ship. The whole origin of our late costly war was economic 
error, and every fibre of its economic errors is gathered up and 
woven into the detestable shibboleth of England's American 
implements and tools — "Free Foreign Trade." While the free 
trade argument in America has been identified with disentegra- 
tion and disunion from the first, the desire to secure a national 
revenue through a protective tariff was the motive which welded 
the feebly united States of the Confederation into the present 
national Union, t 

While the foreign trade policy is hourly breeding war among 
the nations, protection to home industry develops within every 
nation the most gratifying results of peace, and the best effects of 
commerce. It says to each nation, " Mind your own business." 
It teaches each that the best conquest it can make over its rivals 
is to absorb their pursuits, their arts, their populations, and their 
power, by active invention and peaceful immigration. We have 
room in the United States for 300,000,000 of people, and we must 
prepare for their coming. But they cannot all farm. To keep 
them busy every pound of our cotton must be spun and woven 

* " Free trade, peace, good will among nations." 

t See Mason's "Short TarifE Uistory of the United States," and "Twenty Years of 
Congress," by James G. Blaine. 



PROTECTION 18 PEACE. 629 

on our soil, thus saving' wages and profits to the amount of $400,- 
000,000 annually. We must produce all our sugar, whether from 
the beet, from sorghum, or from the cane, thus stopping an out- 
flow of $100,000,000 annually, virtually in coin. We must so 
expand our urban and agricultural industries, as to render the 
foreign market unimiDortant to us for any purpose. This alone 
is the policy which will keep us at peace witli each other and with 
all the world — will enable us to hold together this gigantic union 
of states, which, from the first, has exhibited so many of the 
tendencies toward forming itself into two nations instead of one. 
To maintain the Union by peaceful means, in preference to the 
bayonet, is the first problem in American statesmanship. It can 
not be done unless the two sections. North and South, have a 
commerce with each other five-fold greater than they now have, 
and to this end the commerce of both sections with England 
must be relatively less. Hence the maintenance of the Union 
now, as in 1832 to 1860, hingos upon the maintenance of the pro- 
tective policy. 

South Carolina virtually won disunion, when it bullied Con- 
gress into the Compromise Tariff of 1833. The same contest is 
again upon us, and involves the same consequences. As surely 
as the protective policy shall be abandoned, just so surely will 
the North be compelled to fight again, within thirty years, for 
political union with the South. 

Thus, before us, lie the two forks in our road, as in 1833. 
To the left lie free foreign trade, and domestic dissension and 
disunion ; to the right lie protection, the prosperous expansion 
of our industries, and foreign and domestic peace. 

Had the South begun the development of her manufacturing 
industries in 1780 to 1883, as at first urged by Jefi'erson, Washing- 
ton, Madison, Callioun, Clay, Benton, Jackson, and other of her 
most eminent statesmen, she would have fought for union, instead 
of for disunion, in 1861. But if a manufacturing South could be 
supposed capable of desiring disunion, that result could not have 
been defeated by arms. Free trade bred, in the South, both the 
errors that sought secession, and the industrial incapacity that 
rendered the effort a failure. Protection, if continued twenty 
years longer, will end the desire of the South to be either a 
separate nation, or a retrogressive force in the present nation, 
while developing in that section a power and self-sufficiency, 
whicli would render either desire omnipotent, if it could exist. 

The United States have illustrated, on a tragic scale, the disin- 



630 ECONOMIC PHILOSOPHY. 

tegrating tendency of a policy of free trade with foreign nations, 
which had finally to be overcome by military force, and the 
national union, which was formed chiefly to enact a protective 
tariff on imports, was maintained successfully only through the 
financial and industrial solidarity imparted by the same tariff. 
Protection to domestic industry was the vital principle of Kos- 
suth's movement in 1848 for the vindication of Hungarian unity, 
and which afterwards, under Von Beust, in 1866, found expres- 
sion in the unity of the Austro-Hungarian empire. The same 
principle underlay the reconstruction of United Italy through the 
dash of Garibaldi, the radical penetration of Mazzini, and the 
clear statesmanship of Count Cavour. In France the national 
unity is never weak, because the sentiment of protection to home 
industry is innate. Thus everywhere the two phases, National 
Unity and Protection to Industry, are seen to be only different 
names for the same essential truth. On the other hand, the sole 
tendencies toward disintegration, in that Germany which Napo- 
leon I. found it so easy to convert into the battle-ground of 
Europe, were identified with a free foreign trade. The tendencies 
toward German unity which crowned the late William emperor 
of a revived German empire, in Paris, after the victories of Metz 
and Sedan, were the fruits of protection. The disintegration of 
Ireland from England, and the continually proclaimed dis- 
loyalty of the former, are a fruit of the "sharp bai'gain" known 
as British free trade. Other dependencies of England are only 
loyal because permitted to be protective. 



CHAPTER XVI. 

STATE ACTION IN RELATION TO SPECIAL INDUSTRIES. 

218. Silk. — The efforts, by government aid, to compel the 
culture of silk in Mexico, the West Indies, and the United States, 
date from the very settlement of these several parts of the conti- 
nent, viz. : from 1522, under Cortez, in Mexico; from 1610, under 
King James, at Jamestown, in Virginia, and as early as 1604, in 
the West Indies. The attempted culture of silk, in these three 
portions of America, had a long and disappointing history in this 
period, when only the rudest industi'ies and those most directly 
connected with food, shelter, and the needed raiment of the pro- 
ducers, could survive. This shows that, however sound the 
principle of state intervention and stimulus may be, when applied 
to right cases, it becomes, like private enterprise and industry 
itself, equally fantastic and mischievous when foolishly applied. 

The production of silk requires the patient and skilled labor of 
a peaceful and contented people, not so much for the tending and 
feeding the worms, and the preservation and hatching of the eggs, 
as for the reeling of the silk from the cocoon, and the separation 
from it of all objectionable matter. Yet, from the first, the notion 
prevailed in England that not only could colonists, thrust into 
immediate conditions of danger, harassment, and turmoil, carry 
on this industry favorably, but that it could and should be made 
a happy means of converting Indian savages to the true faith, by 
exhibiting to them, in the wonderful operations of the silk- worm, 
proofs of the existence of a Creator. It was extolled as admirably 
adapted to the negro, owing to his indolence. It was even 
calculated, by one philanthropist, that England could save the 
entire cost of her pauper maintenance, by sending the paupers 
to Virginia, Carolina, and Georgia, to feed silk-worms. Their 
presumed shiftlessness was set down as the prime qualification 
which would assure success in the enterprise. In the 25 years 
from 1731 to 1755, about 251 pounds of raw silk, in all, were sent 
from tlie Cai'olinas to Great Britain, and about 8,829 pounds were 
sent from Georgia in the same period. This was under a parlia- 



632 ECONOMIC PHILOSOPHY. 

mentary bounty of three shillings per pound. In 1766 the bounties 
were reduced one-half. As late as 1790 raw silk was still pro- 
duced, in a very small quantity, for export. In 1725 Pennsylvania 
had sent a small quantity of silk to England. Prior to the war 
for independence, Franklin and other leaders of thought were 
greatly interested in introducing the silk-worm and the mulberry 
tree. From the period of the first war with Great Britain to 1826, 
there was a scattered and unsuccessful attention given to the sub- 
ject by individuals. 

In 1826 Gideon B. Smith, of Baltimore, and Dr. Felix Pascalis, 
of New York, brought the Morns Multicalis tree to the attention 
of the public. Nearly all the States, from Maine to Georgia and 
Indiana, offered bounties, on the mulberry trees, on the cocoons, 
and on the reeled silk ; counties, fairs, and stock companies inter- 
ested in silk-growing followed with further offers. The United 
States granted a farm of 262 acres at Greenbush, N. Y., to one 
Clark, on condition that he should plant at least 100,000 mul- 
berry trees. National and State silk cojiventions were held. 
Stock silk-growing companies were formed. America was under 
the influence of tlie speculative fever prevailing in England and 
France, in connection with the general inflation from 1824 to 
1839, and a portion of the financial ci'aze expended itself upon 
silk culture. The leaders of society, philosophy, industry, and 
science all wrote treatises on silk culture. The mystery and 
poetry of it were fascinating. Men had no railway shares to 
speculate in, and they speculated in multicaulis buds, silkworms, 
eggs, and mulberry trees. Prices rose to $1, $5 per tree, and 
profits, of six-fold the investment, were made in a single year, 
raising trees. In 1839 the bubble burst, and the trees were good 
only for pea brush. Only slight attempts to manufacture silk 
were made, though as early as 1837 Massachusetts was making 
sewing-silk to the value of $150,477, and employing 157 hands. 
Many, if not most, of the present successful silk houses trace 
their rise to the humble manufacture of sewing-silk then carried 
on. In 1840 the total production of American silk is estimated 
at 40,000 pounds. From this time to the present, the culture of 
silk in America has formed an inappreciable element in the sup- 
ply, and the manufacture has been dependent on the imported 
raw silk. As respects silk culture, therefore, experience has 
shown that private enterprise is as likely to be injudiciously and 
wastefully applied as government aid. Both must fail where a 
vast number of persons allow their imaginations to get the better 



FAILURE OF SILK CULTURE. 633 

of their judgments, so as to believe that an industry must prove 
profitable, merely because its processes are fascinating in a scien- 
tific point of view, and its product is attractive in an eesthetic 
sense. Lately, promising efforts have been made to cultivate raw 
silk in Kansas. It is asserted that the worms thrive as well on the 
Osage orange leaves as on the mulberry. As the manufacture 
increases, the cultui-e of silk may, in time, become feasible. In 
1850 the silk manufacture in the United States, obtaining its raw 
silk from Italy and China, employed 1,723 persons ; in 1860, 
5,435 ; in 1870, 6,649, and in 1880, 34,521. The value of the 
products expanded as follows : In 1850, $1,809,476 ; in 1860, 
$6,607,771 ; in 1870, $12,210,662; and in 1880, $34,519,723. 

Inasmuch as the culture of raw silk has proved a failure, it 
may be conceded that whatever duties were collected on raw silk 
prior to 1846 (since that date it has been free of duty), as well as 
the bounties paid to promote its production, and the losses in- 
curred in its attempted culture, have netted no other return than 
the happiness which always attends an enthusiasm, and the wis- 
dom which often follows a defeat. The experimenters sowed for 
experience, and they gathered in the crop. 

The present silk manufacture had its beginnings in a manufac- 
ture of sewing-silk, which was not greatly assisted by the attempts 
at silk culture. It owes its present dimensions largely to that 
universal emulation after equality with the best, among American 
women, which causes every such woman in whatever station 
to desire to possess at least one silk dress. This condition of senti- 
ment among American women was itself produced by the higher 
average of material corufort accorded to American women, than 
to those of any other people, through our higher average returns 
in industry. This created the demand only. That demand 
would have continued, to this date, to be supplied wholly by 
foreign manufacturers, had the duty of 80 per cent, imposed 
for revenue, under the tariff of 1846 to 1861, continued to the 
present time. It was the raising of this duty, from 30 or 40 to 60 
per cent, in 1864 which brought its revenue function into subor- 
dination to its protective function, and created the silk manufac- 
ture m the United States. The rise in the American manufacture 
has been attended by a general decline in the selling prices of 
silk goods in America, compared vv^itli the prices which prevailed 
under the 30 per cent, duty of 1846 to 1872, of about one-third. 

The value of the silk manufactures imported in 1880 is almost 
identical with the value imported in 1853, being slightly upwards 



634 ECONOMIC PHILOSOPHY. 

of $33,000,000. During- the war of 1861-5, the importation fell to 
about $11, 000, 000 worth, but forfifteen years past it has been twice 
or thrice as great, and it still exceeds the domestic production. 

The tariif legislation concerning silk has been as follows : 
From 1790 to 1832, raw silk was free. In 1832 a duty of 12i per 
cent, was laid, which in 1841 was raised to 20 per cent., and in 
1842 to 50 cents per pound. In 1846 this was reduced to 15 cents 
per pound, and since 1857 it has been free. Silk manufactures 
came under a duty of 7\ per cent, in 1790, raised to 12^ and 
15 per cent, in 1804-8— doubled to 30 percent, in 1812-15. In 1842 
the duty was made $2 per pound on silk twist, 25 per cent, on 
silk for manufacture, $1.50 per pound on pongees and plain white 
for printing and coloring, and from 1832 to 1836 manufactures 
from beyond the Cape of Good Hope were charged from 10 to 20 
per cent. , while those from Europe came in free — a very extraor- 
dinary attempt apparently to discriminate against oriental in favor 
of European silks. From 1861 the duty on manufactured silks 
became 40 per cent., and from 1864, 60 per cent. The revenue 
obtained has been from $11,000,000 in 1867 to $15,615,000 in 
1882. This effectually refutes the a priori dictum of Mr. Mill 
that no duty can, at the same time, produce protection and revenue. 
The heavy protective duties, on actively competing products, seem 
to affect the national treasury much as a tight roof affects the 
family cistern. While the inmates of the household are protected 
from the exterior damps, fogs, rains, sleets, and cbills which they 
would derive from too free an exchange of their vitality for 
nature's influences, the family cistern withal is filled with good 
water. For the same dampness which is fatal, when imported 
"free" through the roof, is a very useful adjunct to the house- 
keeper, when collected in the cistern. 

219. Decline of Silk Manufacture in England. — Eng- 
land left her silk manufactures entirely unprotected in 1860, 
after having given them a steady, and at times a vigorous, pro- 
tection, since the reign of James I. The visible decline set in 
from 1861. Tiie number of her spindles employed in the silk 
industry fell from 1,338,544 in 1861 to 842,538 in 1878, and the 
number of persons employed declined from 117,989 in 1861 to 
63, 577 in 1878.* The imports of raw silk into Gi'eat Britain, 



* Robert P. Porter found in Coventry in May, 1883, that the wages in the silk-weaving 
art had so declined that for making one class of goods known as 23-in. "mock gro-. 
grains " the weavers could now only earn about 6s. id. ($1.56) per week. 



ENGLISH SILK-MAKERS GO OUT. 635 

which had averaged 6,191,691 pounds in 1867-70, fell to an annual 
average of 3,460,073 pounds in 1879 to 1882, including a decline of 
one-half in the raw material for manufacture. Deducting the 
amount re-exported, the quantity remaining for manufacture in 
Great Britain declined from 3,560,226 pounds annual average in 
the years 1867 to 1870 to 2,424,287 pounds in the years 1879 to 1882, 
while in the year 1880 the import of raw silk into the United States 
rose to 2,562,236 pounds, being slightly in excess of tlie British 
use of raw silk in manufacture. In 1829, 2,000,000 pounds of 
India silk came to England; in 1882 only 44,549 pouiids.* 

Mr. Robert P. Porter describes the decline of the silk industry 
in England as follows : 

' ' Before the suicidal policy of free trade ruined the British silk 
industry it flourished in all these centers. In Congleton, twenty- 
five years ago, 5,186 operatives were employed, and to-day only 
1, 530 ; in Coventry 40, 600 people were dependent on this industry ; 
to-day not more than a quarter of the number are engaged in the 
ribbon trade. In Derby 6,650 were engaged twenty-five years 
ago, to-day only 2,400. In the most prosperous time of the 
industry in London 60,000 were employed, to-day only 4,000. 
Between 1841 and 1851 over 15,000 hands were employed in this 
industry in Macclesfield, to-day much less than this number. 

* Japan in 1883 sent of raw silk 

To England 2,983 bales. 

" Europe (excluding England) 10,236 " 

" United States 6,154 " 

—Textile Record. 
Meanwliile, the importation of foreign silks for English consumption ({i.e., in excess 
of the foreign silks re-exported) is shown by the following figures to about equal the 
English production, as might be expected from the displacement of one-half the silk 
weavers of England : 

IMPORTATION OF SILKS. 

Year 1880. Year 1881. 

Dress and piece goods $23,738,318 $20,615,413 

Hosiery 412,016 424,977 

Other mannfs. of silks 11,343,883 12,413,113 

Totals $35,494,217 $33,453,503 

Decrease $2,040,714 

EXrORTATION OF SILKS. 

Year 1880. Year 1881. 

Foreign silks re-exported $379,887 $246,671 

Precisely as we have heretofore shown that the quantity of corn imported after the 
repeal of the corn laws was not an addition to the total supply, but only a displacement 
of the domestic production, leaving the supply the same; so the free importation of 
foreign silks is balanced by a withdrawal of domestic silk weavers from I he industry, 
exactly equivalent to the force required to produce the imported silks, had their impor» 
tation been prevented by protective duties, 



636 ECONOMIC PHILOSOPHY. 

The 5,000 employed in Middle ton in 1850 have decreased to ahout 
400 in 1884. 

' ' Basle and St. Etienne send their goods, free of duty, into the 
English home market, and compete with Coventry. Germany 
and St. Chamond send in their braids and displace those of Leek. 
B,oubaix, Lyons, Crefeld, and Milan have exterminated the once 
flourishing industry of Spitalfield. Germany, Switzerland, Italy, 
and France are pushing the Macclesfield goods out of the home 
market. Germans are underselling the Middleton district in gal- 
loons, and Calais undersells Nottingham in lace and hosiery. 
The effects of the French treaty, which Mr. Cobden negotiated 
in 1860, were most disastrous. From that moment the industry 
began to decay. I ask any fair-minded free trader to reply to the 
facts which I give below and which can not be contradicted. 

" At Congleton the ribbon trade left the town. Throwing trade 
gradually declined, particularly in Italian silks. In Coventry it 
ruined the trade. In Derby it greatly reduced silk-throwing. In 
Leek it injured the serge trade. In London it brought ruin to 
many. A gradual reduction of Macclesfield production followed 
its enaction, while it destroyed the trade of Middleton, and in 
Manchester the silk trade practically died out. Nottingham was 
alone the exception with regard to the bad effect on the silk trade 
of the French treaty of 1860. It may even have derived a slight 
benefit from it, because the products are of such a nature as to 
command a demand for them abroad. Never was a more wanton 
and cruel blow aimed at a flourishing industry. In 1857, a few 
years prior to the ratification of the treaty, the import of raw 
silk into England aggregated 12,077,931 pounds. Since then it 
has dwindled year by year, as foreign manufactured goods have 
forced their way, free of duty, into the home market, until the 
last six years it has hardly averaged 3,000,000 pounds per annum, 
in 1883 being 3,178,593 pounds, and in 1881 sinking to 2,904,580. 
On the other hand, the imports of manufactured goods have 
gradually increased in value from about $10,000,000 in 1857 to 
$102,620,000 in 1888. A duty of 15 or 25 per cent, on this luxury 
would have held this important industry for England." * 

*A commission recently appointed by Parliament, to ascertain the causes of this 
decline, addressed a letter to the Boards of Trade of the several silk centers of the 
country, and received the following replies : 

Congleton : " Withdrawal of protection." 

Coventry : " Free imports of French and German goods, combined with high duties 
imnosed by other countries on our goods." 

Derby; "Withdrawal of protection." 



M'CTILLOGH RELUCTANT. 637 

Of the silk manufactures still imported into tlie United States 
about $7,000,000 worth came from Germany, and nearly the entire 
balance from France. The free trade of England, in silks, is fast 
declining to " no trade." 

Leek : " Sewing-silk trade maintained itself." 

London : "Withdrawal of protection." 

Macclesfield : " Free importation of French and German goods, especially black 
silks, velvets, and mixed goods," 

Manchester : "The French Treaty." 

Middleton : " The French Treaty of 18C0, coupled with the adulterated dyes intro- 
duced into England." 

Nottingham : " No decline, owing to the large increase in the use of silk lace." 

The replies to the parliamentary inquiry in relation to the collapse of the British 
silk industry in the nine principal centers of the trade are brief, direct, and tinged with 
sadness. 

J. R. McCulloch, while prematurely boasting in 1863 (in note to Adam Smith's 
" Wealth of Nations," p. 201), that the sillf trade of England, two years after the repeal, 
was more prosperous than ever, still says that a duty of 10 or 15 per cent should 
have been retained. Why, if free trade were a sound basis ? and why, if the silk 
manufacture was more prosperous than ever after the repeal of ii s protection ? Such 
an admission shows, first, that McCulloch truly saw that the repeal of the duty would 
prove destructive to the industry, and also that he knew the industry was not then 
more flourishing than ever. There seems to be a potent spell in the word free trade 
that has the power to make an English economist say what he knows to be fnl.se, every 
time he alludes to it. Mr. McCulIoch's note so palpably convicts him of hiding a pro- 
tectionist belief, and indeed knowledge, behind afree-trade profession, that we publish 
it entire. It shows that McCulloch perceived that silk would be seriously affected by 
foreign competition ; but he justifies allowing it to be sacrificed forsooth, because it 
was only a sixth or a seventh of the whole of British manufactures. And after ad- 
mitting that free trade would seriously affect it, and that 10 or 15 per cent, duty 
should have been maintained, he still does his best to eke out a case for free trade. He 
said in 1863 : "The value of the manufactured goods annually produced in Great 
Britain has been estimated at about 125 millions sterling, including the raw material. 
But linen and silk are the only manufactures that could be at all seriously affected by 
the freest intercourse with other countries ; and the aggregate value of both these 
branches, inclu.'-ive of the raw material, docs not probably exceed 18 or 20 millions, or 
from a sixth to a seventh part of our whole manufactures ; and cannot, therefore, be 
supposed to afford employment to more than a corresponding portion of our manufac- 
turing population. 

" In point of fact, however, the free importation of foreign linens and silks would 
only supersede a very small part of these manufactures. There is no reason for sup- 
posing that any of the principal branches of the linen manufacture would be materially 
injured by the gradual reduction of the existing duties on the importation of linens. 
And although the French excel in the manufacture of lighter silk fabrics, we are 
superior, or at least equal, to them in the manufacture of gloves and hosiery, and in 
that of poplins, and all those mixed fabrics of which silk is the ba=is ; and we are also 
rivalling them in the brightness of our colors, and the durability of our dyes. It has 
been a common practice to insure the safe delivery of French silks in any part of 
London for from 10 to 15 per cent, premium ; so th it it was not, as commonly sup- 
jjosed, so much, perhaps, to prohibitory regulations as to our own ingenuity, that our 
silk manufactures were indebted for that monopoly of the market they so long enjoyed. 
But their supposed dependence on customs regulations made them indifferent to im- 
j)rovements ; and to i<uch an extent did this oiierate, that they were decidedly inferior, 



638 ECONOMIC PHILOSOPHY. 

220. Evolution of Glass Manufacture. — All other of the 
fine arts are imitative of nature, or improvements on her work, 
except music. Music is essentially the creation of the human mind. 
So all other metallic substances, except glass, are the modification 
of a metal or an ore. Grlass, while one of the most ancient, and 
decidedly the most beautiful of them all, has been created rather 
then discovered or improved, by human art. Without it, we 
could not have known the truth of the Copernican system in 
astronomy, that the earth daily rotates upon its axis, and annu- 
ally revolves around the sun. Without it the king's palace was 
a pompous but comfortless barn, aud the transparency of Avater, 
the sparkle of wine, the infinite beauties of the microscopic world, 
the transcendent majesty of the planetary and stellar universe, 
the composition of matter in distant worlds, and indeed nearly 
the entire scope and field of modern science, art, and invention 
would have remained unknown to men. 

Specimens of glass ornaments are found buried with Egyptian 
mummies, and inscribed with the name of a monarch who reigned 
1,500 years before Christ. The Egyptian use of glass ante-dates 
the story, that Phoenician sailors discovered it accidentally among 
the ashes of a fire they had kindled on the sand, and into which 
some soda had fallen, which, fusing with the sand, produced the 
crystal. The latter is doubtless apocryphal. Among the ancients, 
however, glass was an article of jewelry and ornament, a substi- 
tute for pearls and precious stones. A few highly wrought ves- 
sels and plates were formed of it, some of which have come down 
to us in tombs, and in the ruins of Pompeii. In modern Europe, 

even in respect of machinery, to either the French or Germans. Mr. Hnskisson had 
sagacity to perceive the cause of this inferiority, and courage to undertake the intro- 
duction of a new system. In 1825 he reduced the duties on raw silk to a nearly nominal 
amount, and materially diminished those on thrown or organzined eilk ; while, at the 
same time, the prohibition of foreign silk goods was repealed, and they were allowed to 
be entered for home consumption, on paying an import duty of 30 per cent, ad valorem. 
This change of system was violently opposed, and many predicted that it would ruin the 
manufacture. Biit these sinister auguries proved to be wholly fallacious. The measure 
in fact, was signally successful. The manufacturers, no longer depending on custom- 
house regulations, put forth all their energies : and, having called the various resources 
of science and ingenuity to their aid, the manufacture was more improved and ex- 
tended during the dozen years ending with 1837, than it had been during the previous 
century. 

" The duty of 30 per cent, on imported silks being so high as to give a considerable 
stimulus to smuggling, was reduced by Sir Robert Peel to 15 percent., at which, or 10 
per cent., it should have continued. It was, however, wholly repealed in 1860, under a 
clause of the French treaty of that year. The duties oa foreign linens are now also 
wholly repealed. And yet these manufactures are (1863) in a flourishing condition, an4 
jirp far more extensive than at any former period," 



HAMILTON ON GLASS. 639 

the manufacture was begun at Murano, near Venice, and carried 
to such a success that glass mirrors began to take the place of 
the mirrors of polished metal. Colbert, the father of the protect- 
ive policy of Fi'ance, brought the manufacture from Venice to 
France, contemporaneously with those of Sevres china, Flemish 
carpets, and Gobelin tapestry, in the splendid reign of Louis XIV. 
In 1614, the first French window glass was made, though it had 
been made in England in 1557, and in Scotland in 1610, but to an 
extent that only admitted of glazing a part of the windows of the 
royal palaces. Not until 1630 did the use of glass for windows 
reach the common people. Owing to the fabulous value of glass 
beads in trade with the Indians, ai'tisans were sent to Virginia to 
make glass as early as 1609, eleven years before Plymouth Rock 
received the Pilgrims. In Salem, Massachusetts, in 1639, the first 
glass factory was encouraged by a grant of several acres of land. 
Three years after, the Genei'al Court authoi'ized the town to loan 
the proprietors thirty pounds, to be repaid, " if the work succeeded, 
when they were able." In Scotland ten years after, the first glass 
house was erected, and the importation of foreign glass was pro- 
hibited. Scattered enterprises were undertaken in New York, 
New Jersey, and Maryland ; but as late as 1783 very little glass 
was made in America, except an inferior window glass and bot- 
tles. In 1795-97, General James O'Hara, Isaac Craig, and Stephen 
Bayard began the first glass works at Pittsburgh, the town hav- 
ing been laid out in 1784. Among General O'Hara's papers at his 
death was found a memorandum, as follows : ' ' To-day, we make 
the first bottle, at a cost of thirty thousand dollars. " 

While it could easily have been shown to him that he could 
have imported the bottles at a cost of one cent from England, he 
would have deemed that fact quite nrelevant to his purpose, 
which was to leave to his adopted country one more industry 
than he found in it. 

Prior to Alexander Hamilton's celebrated report to the first 
Congress, in 1790, on manufactures and the duty of protection to 
American industry, the duty on glass was two and a half per 
cent. He reported that the materials for its manufacture were 
everywhere found throughout the United States ; that the sands 
and stones called tarso, which include fiinty and crystalline sub- 
stances generally, and the salts of various kinds, particularly of 
the seaweed kali or kelp, are the essential ingredients ; that fuel 
was abundant, and that the manufacture only needed large capi- 
tal, and would afford employment for much manual labor. He 



640 ECONOMIC PHILOSOPHY. 

recommended a bounty on window glass and bottles. In 1794, 
the duty on window glass was raised to fifteen per cent, and on 
certain elaborate glass wares still higher. * 

In 1803, General O'Hara sent to England for more workmen, 
enlarged his works, and began the manufacture of white and flint 
glass. In 1806 Congress, in resentment of British outrages on 
American commerce, prohibited the introduction of most kinds 
of British manufactures, including glass. Though Congress soon 
after suspended the operations of the act, yet the issue of the 
Berlin and Milan decrees, prohibiting all commerce with the 
British Islands, while it seriously impaired our transporting and 
shipping interests and lessened our foreign trade, gave so great 
a stimulus to domestic manufactures as to increase with unex- 
ampled rapidity our domestic commerce.! 

In 1807, O'Hara's white glass works at Pittsbui'gh were reported 
as producing glass to the value of $18,000 per annum, and a green 
glass factory had been erected on the opposite bank of the 
Monongahela. In 1808, the first flint glass factory was estab- 
lished in Pittsburgh by Bakewells & Co. They met with the 
greatest difficulty in procuring trained workmen and the proper 
materials, but at length established a profitable business. 

In 1810 Secretary Gallatin reported ten glass manufactories in 
the country, employing 140 glass-blowers, and making 27,000 
boxes of window glass of 100 square feet each ; that of Boston 

* It is interesting to note that, in the same year in which this tariff act was passed, its 
great author, Alexander Hamilton, formed an incorporated "Society for the Establish- 
ment of Useful Manufactures," with certain privileges, including a city charter over a 
district six miles square, at the Falls of the Passaic, N. J., which they named Paterson. 
It is now one of the largest manufacturing cities in the country. Three years afterward 
the "Hamilton Manufacturing Society " was incorporated and became proprietor of an 
extensive glass works, 10 miles west of Alabany, which its members had nine years be- 
fore set in operation. The change of name was a tribute to the Father of American 
protection, to whose doctrines, relative to the supremacy and coercive powers of the 
National Government, as well as'relative to economical questions, the country has been 
forced to return, to avoid dissolution. 

t Under the protective tariff, framed by Hamilton in 1794, we were at this period, 
collecting so large a revenue that, after paying off upwards of $23,000,000 of the national 
funded debt in four and a half years. President Jefferson reports to Congress that there 
will be a surplus, unless the rate of payments is increased. He inquh-ed whether it 
would do to remit the tariff on salt, which the salt importers were clamoring for then 
as now. Said he : " Shall we suppress the impost and give that advantage to foreign 
over domestic manufactures?" He expressed the belief that "on most articles the 
patriotism of the people would prefer its (the tariff's) continuance, and application to 
the great purposes of public education, roads, rivers, canals, and such other objects of 
public improvement as it may be thought proper to add to the constitutional enumera- 
tion of the federal powers.'' 



FRUITS OF THE GLASS DUTIES. 641 

made crown glass equal to any imported, all the others green or 
German glass worth fifteen per cent, less; that of Pittsburgh used 
coal, all the others wood for fuel. The importations of window 
glass were also 27,000 boxes, the extension of the domestic manu- 
facture, which supplied precisely one-half the consumption, 
being retarded by want of workmen. 

In 1810, thi'ee glass works in Pittsbui'gh produced flint glass to 
the value of $30,000, and bottle and window glass worth $40,000. 
In the same year, a German, named Eichbaum, "formerly glass 
cutter to Louis XVI., late king of France," established busi- 
ness in Pittsbui'gh, and cut the first six-light chandelier, with 
prisms of his cutting, ever cut in the United States. It was sus- 
pended as a triumph of art in the house of Mr. Kerr, innkeeper, 
for public admiration. In 1812, large flint glass works were 
built simultaneously in Pittsburgh and in Boston ; in 1814, a glass 
factory was built in Keene, N. H., where it is still a principal 
business. In 1815 two were projected at Cincinnati. In 1818, the 
New England Glass Co. established at Cambridge one of the 
most extensive flint glass manufactories in the country. With 
two flint furnaces, and twenty-four glass cutting mills, operated 
by steam, and a red lead furnace, they produced the finest work, 
Grecian lamps, chandeliers for churches, vases, antique and 
transparent lamps, and began to export, in competition with En- 
gland, to the West Indies and South America. Capital $80,000; 
annual product $65,000. The Hamilton tariff was thus develop- 
ing its fruits, substituting an export for an import trade. 

In the next year, however, a series of influences which had 
been accumulating ever since the peace of 1815 suddenly broke 
upon the country, with a power that could be realized only by 
those who experienced them. 

In 1810, under the joint influences of the Hamilton tariff and 
the Jefferson non-intercourse policy against England, our manu- 
factures had rapidly increased, and our agriculture and internal 
commerce were prosperous. With a population of 7,239,903, the 
census of that year returned our manufactui'es at $127,694,602, 
and trustworthy estimates increased the total to $172,762,676, or 
about $21 per capita. This was only about one-fourth our pres- 
ent ratio per capita, but it had nearly all been the growth of 
fifteen years of encouragement. * 

* President Madison in the saine year, in his message, congratulated the country upon 
the extension of useful manufactures and the substitution of domestic for foreign sup- 
plies, and said : " lu a national view the chajige is justly regarded as of itseif more thau 



642 ECONOMIC PEIL080PHT. 

The urgent recommendation of Mr. Madison, that Congress 
should not, on the return of peace, permit the restoration of com- 
merce with England to break down ' ' the manufactures which 
have sprung into existence, and attained an unparalleled matur- 
ity throughout the United States, during the period of the Euro- 
pean wars," was one with which Congress agreed, hut which it 
wholly failed, through lack of the required foresight of changes 
in the conditions of industry, to carry into effect. A. commercial 
treaty was adopted on the third of July at London, by which 
"^Ae duties on tonnage and imports were equalized, so that the 
produce or manufactures of the one country could be imported 
into the other, in the ships of eithei^, upon equal terms." This 
inaugurated, in principle, a free carrying trade between the 
United States and a country whose shipping was soon to be 
changed from wood to iron, and from sails to steam. The rate 
of duties was designed to be protective, but the great surplus 
stocks held abroad neutralized this design. The result was in- 
evitable, and the disaster complete, and almost unparalleled in 
the misery it produced. The imports suddenly swelled to 155^ 
millions of dollars in 1816, and the country was for the hour 
flattered by their enormous quantity — the duties, despite the 
lowness of the tariff, rising to thirty-six millions. English manu- 
facturers competed with each other in piling heavy consign- 
ments of goods into the American market, to be sold at a loss, 
under a policy which Mr. Brougham at the time justified in 
Parliament in the following terms : " It is even worth while to 
incur a loss upon the first exportations, in order by the glut to 
stifle in the cradle these rising manufactures in the United 
States, which the war had forced into existence contrary to the 
natural coui^se of things." The importers and auctioneers made 
heavy profits for a year or two. In 1816-17-18, the manufac- 
urers of the country one after another were discharging their 
men. Sixty thousand operatives were discharged, and 240,000 
persons dependent on them were reduced to distress. In 1824, 
after eight years of free trade, the depression had extended to all 
branches of industry. The country had reached that unfortu- 
nate condition in which Gen. Jackson wrote that unless protec- 



a recompense for our privations and losses, resulting from foreign injustice, which 
furnished the general impulse required for its accomplishment. How far it might be 
expedient to guard the infancy of this improvement in the distribution of labor, by 
regulation of the commercial tariff, was a subject which could not fail to suggest itself 
to the patriotic reflections of Congress." 



TEACHING GLASS-MAKING. 643 

tion from competition with the cheap capital and pauper labor of 
Europe were restored, " we should soon be paupers ourselves." 

In 1824, the tariff was made professedly protective as to some 
branches. In 1831, the committee in Congress on glass and manu- 
facture of clay (for, instead of one general committee on manu- 
factures as now, each leading industry then had its committee) 
reported twenty-one flint-glass furnaces in the United States, of 
which six were in and near Boston, and twenty- three manufac- 
tories of cylinder window glass, of which four were at Pittsbui'gh, 
four at Burnsville, Pa., and two at Wheeling, Va. The New 
England Crown Grlass Company, and one of the kind near New 
York, were all, in that line. The total annual product was 
$3,000,000, employing 2, 140 persons, subsisting 10,800, paying in 
wages $720,000. 

In 1834, the manufacture of pressed glass, by means of metallic 
moulds, in imitation of cut glass, an Amei-ican invention, was in- 
troduced into England, a proof among many that even for Eng- 
land Lord Brougham's policy of breaking down American manu- 
factures was short-sighted. Within two years pressed glass had 
become a very prominent branch of the manufacture in all manu- 
facturing nations. From this period until I860, the growth of 
the glass manufacture was steady. Owing to the skill required 
in the manufacture, the abundance of our raw materials, 
the partial protection afforded by its friability, and the 
consequent losses by breakage sustained in shipping it across 
the ocean, it has been less affected than most industries by 
hostile or fluctuating legislative measui'es. In 1860, the 
census returned 112 manufactories of glass of all kinds, em- 
ploying $6,133,666 of capital,* consuming $2,914,303 worth 

* The statistics above given of "capital invested," and "hands employed," were 
not collected with the system and care necessary to make them trustworthy. 
Whether " capital invested " means the value of the original investment on which the 
business was started, without regard to losses or additions, or whether it means the ac- 
tual cash value of the whole property employed at the time the census was taken, or 
the cash value thereof, less incumbrances and debts, or the nominal par of the stock 
of companies engaged, or the selling value of their aggregate stock, was not deter- 
mined by the law, and each marshal in taking the census, and perhaps each manufac- 
turer in making his statements, was left free to take either basis. A manufacture 
might have been started with only $10,000, actual capital, which, being paid out for 
$50,000 of property, would make the capital employed $10,000 or $50,000, as one 
chooses to put it. If then in ten years the business increases in profits so as to pay 
ten per cent, on $100,000, and the company is stocked on $100,000 capital, and its 
stock sells at par, it may be said to have $100,000 of " capital employed," Tet one- 
half of tills on analysis is not capital but good-will. In this respect, therefore, tlie cen- 
gus figures form a very imperfect guide to capital invested. So of hands employed. 



644 ECONOMIC PHILOSOPHY. 

of raw materials, employing 9,016 hands, of whom 251 were 
females, paying $2,903,832 in annual wages, and producing 
$8,775,155 worth of glass annually. Our imports for the same 
year amounted to only 12,105,493. The census of 1880 showed 
211 manufactories of glass of all kinds, employing $19,884,699 
capital, consuming raw materials of the value of $8,028,621, em- 
ploying 24, 177 hands, paying $9, 144, 100 in annual wages,and pro- 
ducing glass annually to the value of $21,154,571. Of these prod- 
ucts the glassware amounted to $9,568,520, the green glass to 
$5,670,433, the plate glass to less than $1,000,000, and the window 
glass to $5,047,313. Of the plate glass manufactories, two are 
in Indiana, one in Kentucky, and one in Missouri. 

From 1816, glass has been protected by specific duties per gross 
and per square foot, an accurate statement of which in detail may 
be found, from 1790 to date, in the official compilation of the tariff 
by the Senate finance committee. Our imports of glass are now 
about three millions per year, and our production probably five 
times that value. The manufacture is one of the most artistic 
and beautiful in which the human energies can be employed. 
The conversion of the rude sand, ashes, and salts into a transpa- 
rent crystal, the processes of fusing, molding, pressing, cutting, 
blowing, chasing, silvering, embossing, engraving, and lettering 
are all attractive to the mind, and educative to the hand, the eye, 
the nerve, and the taste. Through the refining power of intel- 
ligent industry, over the moral nature of man, these mechanical 
processes tend, like all the finer manufactures, to elevate the 
standard of thought, feeling, and life, as well as the wealth and 
comfort in the communities in which they are carried on. 

221. Evolution of the Iron and Steel Manufacture. — 
The making of iron and steel implements for hunting, for war, 
and for defense, as well as for chaining prisoners, and for per- 
sonal ornament, probably precedes any settled agriculture, and 
is possibly coeval with that prehistoric period in which domestic 
animals were tamed, and primeval man advanced from the 
hunting, or savage, to the shepherd life. In Central Africa, at 
points where very little cultivation of the soil was carried on, 
Stanley found tribes devoted to the manufacture of ii^on for 

If a glass factory incidentally employs upon wages the men who mine its coal, or col- 
lect its fuel, its tinners, packers, salesmen, etc., its list of persons employed may ap- 
pear at 250. But if, instead of hiring them on wages, it lets the same work to one hun- 
dred of them on contract, it only appears as employing 150. Yet, in both instances 
alike, the glass factory is the real employer of the whole number, and all would be 
unemployed if it should stop work. 



ANTIQUITY OF IRON. G45 

spear-heads and arrows. Anterior to the age of iron and steel 
weapons, there was an age of stone and bronze. At the discovery 
of America, the Indians of North and South America were still 
living in this stone age, using bone for fish-hooks, flint for 
arrow-heads, and stone hatchets as well as mortars and pestles 
of stone for grinding their corn. In Asia, Africa and Europe, 
the remains of the stone age interest the archaeologist, and are 
associated with an inferior brown race, small of stature, and 
low of intellect, which certainly spread over Europe, and may 
have had its habitat throughout Asia. But history, even in 
Africa, everywhere opens with iron somewhat known. In 
Homer, as Gladstone remarks, it is everywhere rare and precious. 
But in China, 3,000 years before Christ and 1, 100 before Homer, it 
was commonly made, and of the best quality, as early as West- 
ern Asia or Europe were in a condition to leave written records of 
its arrival, by camel back, across the wilds of Tartary from the 
far-away land of the Sei'es. Dr. Schliemann finds no iron in the 
ruins of Troy itself, but Homer wrote long enough after his facts 
to admit iron becoming known in the interval. The pyramids 
antedate all history in Egypt, having come down from unknown 
builders, who may or may not have been of the same red I'ace as 
the Egyptians of tlie historic period. Yet iron antedates the 
pyramids. In the Greek religion one of tlie gods, Vulcan, is a 
forger of iron, and this name is supposed by Goldziher to be 
identical with tlie Tubalcain, and even with the Cain, of Genesis.* 

It thus appears that at least one of the manufactures, by a 
long stride, precedes agriculture, and this, if true, shows how er- 
ratic was the economic theory of Ricardo, that cultivation would 
begin on the best soils. The fii'st cultivation would consist in 
the toil of hunters, fishermen, and herdsmen, or even of savages, 
seeking only materials for spear-heads, in collecting the earth to 
burn it for its iron. This would early attract attention and set- 
tlement to wlaatever unsightly hills, rocks, and forest-covered 
mountains might be found most productive of iron ore, lime, 
and fuel. These would command a rent even before the soil 
had begun to be tilled, because they would supply man with his 
earliest want — a destructive weapon. 

Mr. Swank, t in his admirable "History of the Iron Manufac- 
ture," shows that Europe bristles all over with points where iron 
and steel was made in a j)rimitive manner, as early as any thing 

* " Mythology of the Hebrews," by Goldziher. 

t " The Iron Manufacture in all Ages," by James M. Swank. 18S4. 



646 EOONOMIG PM1L080PHT. 

is known of the several parts in which it is made. Whatever the 
prehistoric man may have been, the historic man was a " smithie " 
from the start. The earhest historic nations— Egypt, Babylon, 
Assyria, Nineveh, Phoenicia, Greece, Eome— must have found in 
the iron and steel manufacture the chief reason why they became 
historic. Iron played an important role in organizing society. 
It furnished the sword, spear, bridle, spur, knife, lance, trowel, 
plow, loom, fish-hook, arrow-head, battering-ram, sceptre, shield, 
armor, gun, pen, cannon, engine, and ship. The mode in which 
an army could be drilled, and fought, depended on the progress 
its country had made in making iron and steel. The number of 
men capable of being handled under one leader, and the nature of 
the ranks and orders which should pervade society, are a sec- 
ondary consequence of iron and steel. Sir Walter Scott truth- 
fully portrays the importance of iron and steel, m his graphic in- 
terview between Richard Coeur de Lion and the Saracen chief 
Saladin. Richard vaunts his brute force by cleaving a bar of iron 
with his sword, while Saladin more deftly hints the graceful 
superiority which the Mohammedan Avorld then temporarily en- 
joyed over the Christian, in the useful arts, by severing a silken 
scarf with his rapier, while it floated on the air. 

222. Rivalry between Great Britain and America.— 
A century ago (1788) Great Britain produced only about as 
much iron as Georgia now produces, viz., 68,300 tons. Her entire 
imports were only 15,000 tons. All the more advanced forms of 
iron and steel production in Great Britain were limited to this 
small supply (83,300 tons), for their raw materials. This repre- 
sents a degree of advancement about equal to that of the United 
States in 1820 to 1830. As the population of the United States 
was about 9,000,000 in 1820, and that of Great Britain, without 
Ireland, is believed (in the absence of a census) to have been 
about 9,000,000 in 1788, it may be said that the iron production 
bore as large a proportion to population in America in 1820 as it 
did in England in 1788—32 years earlier. The rise of production 
within the century in England was as follows : 

Tear. JVo. of Furnaces. . Tons. 

"96 121 104879 

1806 173 258,000 

1820 284 , 400,000 

1827 690,500 

1840 1,396,000 

1854 (then one-half the world's production) 1,369,000 

1872 '.' 6i741,'929 

1880 7,749,233 

J883 8,856,680 



GATGHING UP IN IRON AND STEEL. 647 

The United States in 1854 had barely passed the English product 
of 1827, by turning out 736,218 tons. In 1866, by producing 
1,350,343 tons, we barely rivalled the British product of 1840. 
It was 1879 before we had caught up with the Bi'itish product of 
1854, producing 3,070,875 tons. And in 1887, a year of " boom" 
in the iron production in the United States, our product of 6,330,- 
000 tons, of 3,000 pounds each, brings us into equal rivalry 
with the British product of 1872. It is probable that in fifteen 
years, if protection to ii^on and steel and their manufactures shall 
be steadily maintained, the American production will rise above 
the British production in quantity, and will meet it at every 
point in price. At present, the pig, bar, sheet, scrap, and other 
foi'ms of crude ii'on and steel for manufacture are somewhat 
dearer than in Great Britain, while the finished forms of imple- 
ments of iron and steel, such as locomotives, boilers, all railroad 
rolling-stock except rails, engines, machinery of all kinds, instru- 
ments, implements, edge-tools, nails, and builders' hardware, are 
on the same level in the two countries. It follows that, m the 
present state of the iron manufacture in the United States, the 
tariff duties paid on such forms of crude iron and steel as may be 
in any degi'ee imported rest, so far as they are not paid by the 
foreign producers, on the American manufacturers of iron and 
steel goods, and not on the consumers or purchasers of the ulti- 
mate products into which they are made. 

The efforts of Great Britain to repress the iron and steel 
manufacture during the colonial period were pointed and effect- 
ive. In 1719 Parliament forbade the making of iron wares of 
any kind, out of "sows, pigs, or bars," and also the conversion of 
sows, pigs, or bars into rods. In 1750 Parliament removed the 
duty from American pig-iron, so as to induce its export to Eng- 
land, to be there manufactured, and enacted that all machinery 
for carrying the manufacture farther than pig, and for making it 
into rods or steel, should be, on criminal information, abated as a 
public nuisance. This law was generally enforced,* Benjamin 
Franklin's name as pi'inter appearing under the Governor's 
proclamation by which its enforcement was announced in Penn- 
sylvania in 1750. 

Still earlier, however (in 1696-99), an act of Parliament had made 
it criminal to export from the kingdom any frames or engines for 
knitting gloves or stockings, under pain of forfeiting the frame 
and a fine of £40. 

* Swftnk, " History of Iron Manufacture," p. 16", 



648 ECONOMIC PHILOSOPHY. 

In 1718 it was made criminal to entice any artificer away from 
Great Britain, and if any artificer, when so enticed into any coun- 
try beyond the seas, there to carry on his calling, did not return, 
on six months' notice, to Great Britain, he forfeited lands, goods, 
became attainted so as to become incapable of taking property by 
descent, devise, or purchase, and was ' ' put out of the king's protec- 
tion." 

In 1781 the export of utensils made use of in the cotton, linen, 
woolen, and silk manufactures, previously pi'ohibited, w^as pun- 
ished with increased severity. In 1785 these prohibitions were 
extended to tools and titensils made use of in the iron and steel 
manufactures of Great Britain. As late as 1835 and 1833 these 
acts were renewedly affirmed, with new penalties, and they were 
not repealed until 1845.* 

Meanwhile, from 1782 to 1846, the British duties on iron and 
steel were much more protective t of the British product, than the 
American duties were of the American product. 

Had the American Congress exactly copied, for the United 
States, the British tariff on iron and steel, which prevailed from 
1790 to 1842, the American iron and steel manufacture would not 
have been crippled by the reverses which overwhelmed it in 
1816 to 1819, in 1839-40, and in 1846 and 1857-61. It would have 
advanced to such a point that in 1822 to 1845, when it had become 
necessary to substitute iron engines, boilers, and screws for pro- 
pelling vessels, in lieu of hempen canvas, and to build the ves- 

* Swank, "History of Iron and Steel Manufacture in ail Ages." 
t Scrivener's " History of the Iron Trade " says : " From 1782 till 1795 the duty on 
foreign bars was £3 16s. 2d. per ton. It rose to £3 4s. Id. in 1797 ; from 1798 to 1802 
it was £6 15s. 5d. ; in two years it had got to £4 37s. Id. ; from 1806 to 1808 it stood at 
£5 7s. 5%d. ; in the three years between 1809 and 1812 it was £5 9s. Wd. ; and in the 
five years ending with 1818 it had been £6 9s. lOcf. At this date a distinction was made 
in the interest of British sliipping : for whilst thenceforward, till the close of 1825, the 
duty on foreign bars was £6 10s. if imported in British ships, it was £7 18s. Gd. if im" 
ported in foreign. Nor was this all ; iron slit or hammered into rods, and iron drawn 
down, or hammered, less than three-quarters of an inch square, was made to pay a duty 
at the rate of £20 per ton ; wrought iron, not otherwise enumerated, was taxed with a 
payment of £50 for every £100 worth imported ; and steel, or manufactures of steel, 
were similarly loaded with a 50 per cent, duty." 

On the contrary, under (see Senate Finance Committee's compilation) our first Ameri- 
can tariff of 1789 to 1812, most qualities of iron were under a duty, at first, of 7% per 
cent., then of 10, 15, 17J4, and did not reach 35 per cent, until the general war meas- 
ure of 1812-1815, doubling all duties. After 1816 bar iron paid only from 45 to 90 cents 
per cwt., or about one-half the English rate. Nails under American tariff paid only 3 
cents per pound, under the English 50 per cent, which was about three times the Amer- 
ican rate. Articles not otherwise enumerated were from 20 to 25 per cent, in Amer- 
ica, 50 per cent, in Great Britain. 



EFFECTS OF LAGGING BEHIND. 649 

sels themselves of ii'on and steel in lieu of wood, America "would 
have been as well prepared as England, or better, to turn out the 
required quantities of iron and steel at low rates. Indeed the 
demand for iron and steel was intrinsically far greater in the 
United States than in England, since, as events have proved, the 
former would need to build 125,000 miles of railway where 
17,000 miles would suffice for the latter. Thus in the failure of 
the United States, to protect its iron and steel industry and manu- 
factures in the degree that England protected hers, lay the clue to 
the decline of American shipping when the time came for the 
transition from sails to steam and from wood to iron. During 
our colonial period, under the stringent English laws against the 
manufacture of bar and pig into the more finished forms, there 
was a steady annual export from 1718 to 1776, from the American 
colonies to Great Britain, of from 1,000 to 5,000 tons of pig, and 
from a very small quantity, or none, up to 2,000 tons of bar iron.* 
It would have been very easy, therefore, by a proper system of 
protective duties, to have developed our iron and steel manufac- 
tures at as rapid a pace as our agriculture. 

The political effects of such a policy would have been even 
more important than its industrial effects. It would have pushed 
the iron and steel manufacture as well as the cotton and woolen 
manufacture, which are so largely dependent upon cheap iron 
and steel for their machinery, downward into Georgia, Alabama, 
Tennesseee, and North Carolina in 1840-50 with as much vigor as 
they have since entered into those States in 1870 to 1880— thirty 
years later. This would have caused a large part of what has 
been, during the past forty years a foreign commerce, between the 
South and England in raw cotton, and between the North and 
England in breadstuffs, to have been an iaternal commerce 
between the two sections. It would also have given a value to 
skilled labor at the South, which would have made the profit of 
gradually freeing the slave by converting him into a skilled 
workman, greater than the profit of retaining him in slavery. It 
would have caused also, more railroads between the North and 
the South, than were in fact built to unite both sections to En- 
gland, by our seaports. More travel and trade, more interchange 
of residence and people, more commerce in ideas would have 
arisen between the two sections. The combined armies of the 
world could not, under these circumstances, have forced the two 

* Swank's " History of Iron and Steel Manufacture," p. 388. 



650 



ECONOMIC •PHILOSOPHY. 



sections of the Union asunder. The protection question, espe- 
cially in its relation to the commodities of iron and steel and 
cottons and woolens, is the outer husk of the Union question in 
the United States, as it has also been in Germany and in other 
nations. But, aside from this political significance, while it is a 
matter of judgment, not admitting of mathematical demonstra- 
tion, it is our judgment that if in 1789 our forefathers had abso- 
lutely prohibited the importation of iron and steel, cottons and 
woolens, from any source or under any duty, the American peo- 
ple would have outstripped their English cousins in all these 
branches of manufacture as early as 1845, would have had more 
iron and steel to this time than they have had, and at a lower 
aggregate cost, would consequently never have suffered a decline 
in their ocean-carrying and would have escaped the southern 
war for secession.* 

Mr. William Kent read before the American Association for the 
Advancement of Science, in 1884, a paper on railroad building, 
and the iron and steel manufacture in the United States, in which 
he happily stated the chief points of the evolution of the iron and 
steel industry since 1861, collected them all into a table of 
statistics, and then exhibited all the facts contained in the table 
in a static chart. They show that in 1860, after seventy years of 
vacillating and occasional, but always inadequate, protection to 
our iron and steel interests, ending with sixteen years of very low 
duties, we entered upon twenty-four years of actual protection. 

* The world's iron and steel production is now as follows (Swank's "Iron and 
Steel Manufacture in all Ages," p. 393) : 



Country. 


Pig Ieon. 


Steel. 


Coal. 




Year. Tons. 


Year. 


Tons. 


Year. 


Tons. 




1883 8,490.224 1 


1883 
1883 
1883 
1883 
1883 
1883 
1881 
1882 
1873 
1876 
1883 


2,158,880 

1.673,534 

1,066,920 

509,045 

220,000 

271,732 

292,360 

62,203 

216 

2,800 

20,000 


1883 
1883 
1883 
1883 
1883 
1882 
1881 
1882 
1880 
1882 
1883 


163,737,327 




1883 
1883 
1883 
1883 
1883 
1881 
1882 
1880 
1883 
1882 


4,595,51Ca 

3,397,588 

2,067,387 

770,659 

655,221 

462,042 

399,001 

85,939 

53,000 

100,000 


96,159,719 


Germany and Luxemburg 


70,223,456 
21,446,199 




18,134,880 


Austria and Hungary 


15,555,292 
3,437,840 




250,000 


Spain 

Italy ... 


847,128 
220,000 


Other countries 


8,000,000 


Total 




21,076,571 




6,277,690 




398,011,841 


Percentage of United States 




22 




27 




24 



a. In 1886 the American product^ of pig iron rose to 6,366,668 net tons (of 2,000 lbs), 
being 5,634,543 gross tons. 



INCREASING SIX-FOLD. 



651 



In 1860 we were making less than a fourth as mucli pig iron as 
Great Britain ; in 1883 we made about five-eighths as much, and 
in 1886 three-fourths as much. The causes of the depression of 
1873 are indicated in our chapter on commercial crises. Within 
the interval the manufacture of iron rails has become extinct, and 



r OT-i-j.jOTTjiiracDt-oooiOTHCjro^mcoc-oocRO-r-KNco 
Vfio r 1 CO CD o CO CO CO :d o :o :d i^ t^ i- ?.- i- 1- 1- i- I- i' 00 Xf 00 QO 

J- ^tli . COaOOOOOOOQOOOCOOOOOOOOOQOQOOOCOCOCOOOQOOOOOQOOO 


Immigration. Num- 
ber of persons. 


89,734 
89,007 
174,524 
193,195 
247,453 
314,917 
310,965 
289,145 
385,287 
350,303 
346,938 
437,750 
422,545 
360,814 
191,231 
157,440 
130,502 
153.207 
250„565 
593.703 
720,045 
730,-349 
570,316 




Pig iron produced in 
Great Britain. Tons 
of 2,240 pounds. 


38,26,752 
3,712,390 
3,943,469 
4,510,040 
4,767,911 
4,819.254 
4,523,897 
4,761,023 
4,970,206 
5,445,757 
5,963,515 
6,627,179 
6,741,939 
6.566 451 
5,991,408 
6,365,462 
6,555,997 
6,608,664 
6,381.051 
5,915,337 
7,749,333 
8,377.364 
8,493,287 
8,490,234 




o 

II 

3 
■~, O 
Qj a, 

3- 


Steel rails. 


OOC<CO«CJO^OOCJ=inCTOO£--i-IOO!- 
10COOO»-IOJ05C010-3<TfrtiCOCD^CO 




Iron rails. 


GOO?-'-i^CDOO<:ocoaOt-'7?Oin';DOO£-"iCCO'^Oi.-iC o o'^ 
Tj<T}*'^i'-O*C2Q0GO£.-'£--L--t-G0i.-'in'^-^COC0Tti"^-^Tt^-/' ^ QJ 


Pig iron. 


c-(Ocoio05;ocD-*osocoioQO«OiO<?Jao^-^ooir5ipM 

CJC*C^TO10-^'rJi"-3'CO'^COCOTliT}<COC^C*»-iT-lC^M(>iC^O? 


Rolled iron, except 
rails, made in United 

States. 


536,958 

500,048 

595,311 

579,838 

598,386 

643,230 

705,000 

710,000 

941,992 

1,076,368 

1,110,147 

1,097,867 

1,042,101 

1,144,219 

1,333.686 

1,627,324 

1,838,906 

2,155,346 

2,265,957 

2,283,920 


Pig iron made in Uni- 
ted States. Net tons. 


919,770 
731,544 
787,662 
947,604 
l,lc5 996 
931,582 
1 ,350,343 
1,461,226 
1 ,603,000 
1,916,641 
1 ,865.000 
1,911,608 
3,854,558 
2,868,278 
3,689,413 
3,266,581 
a, 093,236 
2,314,585 
2,577,361 
3,070,875 
4,295,414 
4,641.564 
5.178,122 
5,146,972 


mai-TiiiocoiorrC'^co^-iTaioiG^G^c^trtt- 

Approximate rail con- ni-t-'-.oi<»=t;i-<=i« t-.=o,-*'o;^.=i2- 
Bumption. Nettons. g?So25SS?ro^?^SSfeSgSg 


1 03THC0C00JO0J'-H00t~10O!>CnTH!>£- 

J 'rPQOCOlOOOt^T-HTtOOCOTHTl'QOC^C^t- 

Rails imported. Net : R.^.'-I.'-l^^'^.'--".^.,'^ 't^,'=^,r,=^_ 

+ ^«r. .! C0OC0CSC0OQ0Q005 Tj^OCOrtOO 

tons. coiOi-iCicoTOiooT-i Tj>05ooeira 

1 ■r-iC-iCOCOiOiOOi,-' 0?COO* 


. QOoooioocDc^QooO'Tj'coocoot-coff^ajc^mcot^OTii-p 

1 OT^.-iC0COC^!?:Oi-ICDOe0Ot-T-HT-i0JO00t-C0OOT05 

lotai rails maae in ^•o,-„^tfo'to'o'Nco-OToVooomCTOJ%*«TO_,Vooo'" 
United States. Net ioQor-jt-:=^"'22==^"5'vJ^-'='2?P'^teF^'"'^-5ooto 

" ' 1 OJ 1-1 0* Oi CO TO T)> -T m lO CO £.- O^OO L- i> 00 i.~ 00 T-<^-^0O CO CO 


Oinooooio^co>-co3ooT)<o(Nio-ci< 
mcjiooioi^r-iTrcDcocoococDcsinin 

steel rails made in aJ oj « « o <u o■'°-'H'^-°-'"•-'='-'='-°'.■'"-^-".-"-°'-^"..^.-'"- 
United States. Net § = §gggg^^-°=S?§S|^|S|||3g?§g 
tons. |a§§aflafl i-. rn <n -* -» o co » „ ^_^^_ 


Iron rails made in 
United States. Net 
tons. 


205,038 
186,818 
213,913 
275,768 
335,369 
356,292 
430,778 
459,558 
499,489 
583,936 
585,000 
737,483 
905,930 
761,062 
584,469 
501,649 
467,178 
332,540 
323,890 
420,160 
493,763 
488,581 
227,874 
64,954 




Miles of railroad built. 


COT-'-fOCCl^CDC:^05000SOOt^lOCOO>wt-.-«-'^03rH»o 

-fir:coir;cot-r-i-i<i~,-Hi-i~i.-oOrtT-ioOQO«Saj05u^ 

oo CO 00 O i.- T-<^1- -3> en CO O. « 00 ■r-(_r-. t- i> O) CO I- r-i t~ O i.~ 


o 


Year. 


1860 
1861 
1862 
1863 
1864 
1865 
1866 
1867 
1868 
1869 
1870 
1871 
1872 
1873 
1874 
1875 
1876 
1877 
1878 
1879 
1880 
1881 
1883 
1883 



steel rails, of which we made our first in 1867, have superseded 
iron. The rapid rate of decline in the price of steel rails from 



b'52 ECONOMIO PHILOSOPHY. 

$158. 50 per ton (gold) in 1868 to $37.75 per ton in 1883, at which date 
they were produced more cheaply than iron had been or could be 
produced, is one of the marvels of industrial development. 

The preceding is Mr. Kent's tabulation of statistics plotted on 
diagram. 

The chart, as appears by the figures on the left margin, is so 
drawn that each check space represents, as to immigrants, 50, 000 ; 
as to railroads, a hundred miles annually built ; as to iron and 
steel, 250,000 tons annually produced ; and as to prices of rails, 
a rise or fall of $10 per ton. 

223. American Shipbuilding, Coasting and Ocean 
"Vessels, and Carrying Trade. — a. The Raw Materials of Ship- 
building. — The narrowness of the trading spirit was not sufficient 
in the early days, nor in the later midday of the republic, to cause 
it to be supposed that Henry Clay, of Kentucky, favored protec- 
tion to American industries becaiise the people of his State were 
largely engaged in growing the hemp that would be used in 
making canvas and cordage for shipping. The protection of our 
shipping, however, naturally received the first attention at the 
hands of the founders of our government. Owing to our great 
supplies of cheap lumber we had the first requisite to ship- 
building. The tendencies of the hardy sons of New England 
toward fishing and whaling supplied the second, a maritime class. 
Our position among commercial nations was less central than that 
of England, and our capital and banking facilities were less. 
Our manufactures also, were about thirty years behind those of 
England, in that quality of dimensions, or magnitude, which is the 
chief requisite to cheap production. With these aids and draw- 
backs, the adoption of the Federal or National Constitution in 
1790 placed it in the power of Congress, for the first time, to legis- 
late in a manner to develop our shipping. 

b. The Navigation Laivs. — The American navigation laws, 
adopted when the government was founded, permit only Ameri- 
can-built vessels to be registered as American vessels. American 
vessels are of two classes, those engaged in the ocean-carrying 
trade, i. e., between our ports and those of other nations, and 
those engaged in carrying between different points on our coast, 
which is called the coasting trade. From our coasting trade all 
foreign-built and foreign-owned vessels are shut out by peremp- 
tory prohibition, the provision of the statute being that any vessel 
having a foreign registry, which carries any freight or passengers 
between two American ports, unless they be ports between which 




i£i*K, 1S60 1661 



1 1 i 7 8 3 1870 i 2 3 4 5 7 3 9 ISSO I a 9 I3ftl 

Vmtjram shotv'tny Raiiroail Coiutrucliuit, Jiuil ami Irti/i J'rwluctlbn, Ilnnttgratiutt, tic., /rum IWJO lo ISM. 



PROTECTING OUR MERCHANT SHIPS. 653 

there is direct overland communication through the country to 
which such vessel belongs, shall be forfeited. 

Our navigation laws, as originally enacted, also virtually ex- 
cluded foreign vessels from carrying a large share of our imports 
and exports by a system of " discriminating duties, " which means 
higher duties on the same goods if brought on Bi'itish or other 
foreign vessels than if brought in American vessels. Thus, under 
the act of 1789, teas, if brought in American ships from China 
direct, paid only from 6 to 20 cents per pound ; if brought in 
American ships from Europe only, then from 8 to 26 cents per 
pound; but if brought to this country in foreign ships they paid 
from 15 to 45 cents per pound, or two and a half times as much 
as if brought fi'om China in American vessels. This discrimina- 
tion continued in principle, though frequently changed in 
amount, until 1833, at about which time, under the cry of free 
trade, then beginning to be popular with the Southern wing of the 
Democratic party, the discrimination was given away by the 
Senate in treaties with one foreign power after another, until it 
was virtually repealed. This withdrew tariff protection from our 
ocean-carrying trade, and opened the privilege of carrying our 
exports and inaports to whomever would carry them cheapest. 
Our coasting trade remained, being held fast by the clause in our 
navigation laws which prohibited any foreign vessel from carry- 
ing between two American ports. For the period from 1833 to 
1855, this practice of getting our carrying done where we could 
get it done cheapest did not develop any injurious effects, for the 
reason that vessels were still built of wood, of which we had the 
cheapest supply, and dependent on sails. 

c. The Tonnage Acts. — The tonnage act passed in the first ses- 
sion of Congress also favored American shipping as against the 
ships of foreign powers. The rate imposed on vessels built and 
owned in America was 6 cents per ton ; foreign-built and foreign 
owned vessels were charged with 30 cents per ton; and vessels 
both built and owned by foreign subjects were charged 50 cents 
per ton. The effect of the navigation laws and tonnage acts, on 
the carrying trade of England and America, is seen in the follow- 
ing table (from "Taxation in the United States," by H. C. Adams, 

p. 42) : 

American tonnage British tonnage 

Tear. employed in for- employed in 

eign trade. Ami-rican trade. 

1789 127,329 94,110 

1792 414 679 206,065 

1794 525.649 37,058 

1796 675,046 19,669 



654 ECONOMIC PHILOSOPHY. 

These figures conclusively refute those who say that the best 
way to protect our navigation interests is to let them alone. 

Adams further says (p. 70) : " The growth of American ship- 
ping, from 1789 to 1807, is without parallel in the history of the 
commercial world. During the years intervening between those 
two dates, American tonnage engaged in the foreign trade in- 
creased from 127,329 tons to 848,306 tons, i.e., the capacity of ship- 
ping owned by American citizens devoted to the foreign trade had 
increased six and eight-tenths times." Between 1816 and 1846 a 
series of about fifty acts of Congress were passed, from time to 
time repealing the tonnage duties by piecemeal, and as to one 
country at a time. In 1818 they were abolished as to vessels be- 
longing to subjects of the King of the Netherlands, in 1819 as to 
Prussia, Hamburg, and Bremen. Among the last abolished 
were those on Spanish vessels, in 1846, from which were still re- 
served vessels coming from Cuba and Porto Pico. Mr. Wells, in 
his "History of American Merchant Marine, " p. 85, says: "At 
the commencement of the war there were no tonnage taxes." 
We think this is substantially but not literally true. In 1862 a 
tonnage tax of 10 cents per ton was laid, which was afterwards 
increased to 30 cents, the present rate, payable alike by foreign 
and domestic vessels, and only once a year on any vessel, and 
alike whether she enters an American port once or a hundred 
times. But if any person, not a citizen of the United States, be- 
comes part owner of a vessel of American build, then the tonnage 
tax is increased to 60 cents per ton, and the vessel ceases to be 
entitled to registry, or enrollment, as an American vessel. 

d. The Plea for Free Ships. — An American citizen, who pur- 
chases an English vessel, has not the right to have it registered as 
an American vessel for foreign trade, or to have it enrolled or 
licensed for coasting trade, so as to entitle it to protection by our 
government as being in theory a part of our American soil. Ex- 
actly what the status of such a vessel would be in an American 
port we do not say, as we do not know that the question has ever 
been put to a practical test. If such a vessel should attempt to 
take part in our coasting trade by carrying goods from New York 
to Charleston she would be forfeited, because the statute so de- 
clares. What the legal consequences would be of her taking part 
in foreign traffic, without being registered as an American vessel, 
or as a vessel of any other nation, we do not ssij. The reasons 
of this state of the law are that, to allow the free importation 
3,nd registration of foreign-built ships would, in the present con- 



DISCRIMINATING DITTIES. 055 

dition of prices for ship-buildiug here and abroad, practically put 
an end to the American business of building ships, for whatever 
portion of our carrying trade the ship so imported could be used. 
If she could be used only in our ocean-carrying tra^de, then the free 
importation of ships for ocean-carrying only would destroy 
American ship-building for ocean-carrying only. If ships, how- 
ever, could freely be imported for the coasting trade as well, ^. e., 
for carrying between American ports, then American ship-build- 
ing for coasting, lake, and river purposes would all be seriously 
invaded or left open to invasion and destruction at any time. In 
return for the national character accorded to American vessels 
during peace, the government has the right under- a sort of emi- 
nent domain to use them for naval purposes during war. Our 
government has always held that it must, for its naval protection 
and national defense during war, absolutely prohibii foreign ves- 
sels taking part in its coasting trade. Great Britain did the same 
for its coasting trade until 1849, when it threw open the right to 
carry between British ports to the vessels of all nations. 

e. Effects of withdrawing protection from ocean-going shijJS 
and entering on a free scramble for the ocean-carrying trade 
ivithout subsidies. — In our ocean-can*ying trade, however, the 
United States applied the protective policy in behalf of American 
vessels, by admitting goods brought in vessels owned by Ameri- 
cans, at lower rates than if brought in foreign vessels, from 1789, 
when the first navigation laws where passed, to 1815, w^hen by the 
reciprocity treaty * with England we agreed to charge no dis- 
criminating duties or tonnage against English vessels coming 
into our ports, if England would charge none against American 
vessels entering hers. The adoption of the policy of discrimin- 
ating duties, of which Madison was the strenuous advocate, had 
transferi'ed to American vessels the ocean-carrying which had 

* Et. Hon. Wm. Huskisson, president of the Board of Trade, epeaking in the House 
of Commons on May 12, 1826, says essentially that England adopted the so-called re- 
ciprocity law of 1815, giving American vessels the privilege of carrying goods and 
products of other countries into British ports, because it desired for English ships the 
privilege of carrying goods of other than English production into American ports, 
and because it thought the reciprocity would give American vesspls few or no addi- 
tional freights, while it would give English vessels sailingto America an increase of 
freights of great value. 

Until August 5, 1883, American vessels paid port and dock dues on the gross ton- 
nage, while English vessels paid only on the net tonnage. The National Lino steamer 
America, having a gross tonnage of 5,5C8 tons, and a net tonnage of only 2,829 tons, if 
registered as an American vessel would pay as port dues $1,658.40, but as an English 
vessel only $847.70. 



656 



ECONOMIC PHILOSOPHY. 



previously been done by English.. The American tonnage em- 
ployed in foreign trade had multiplied five times in nine years, and 
the English tonnage employed in the American trade had de- 
clined four-fifths. From 1815 to 1851 the ocean-carrying trade of 
both England and America continued to be carried on in wooden 
ships. While England gained immensely, relatively to other 
nations, by having induced us to adopt the free-trade policy of 
getting our exports and imports carried where we could get them 
carried cheapest, still we did not lose, so long as the carrying 
was done in wooden ships, except in attempting to compete witli 
ocean steamers. We could always build wooden ships cheaper 
than they could be built in England. 

In 1855, however, our relative deficiency in iron and steel man- 
ufactures began, to send us behind. The following schedule 
shows the degree of decline in our tonnage engaged in the ocean 
traffic, which was thrown open to a so-called free competition, 
but really to a competition with an English subsidized commer- 
cial marine : 





§> 


1 


•a 


■S^ 


•S 




1 


1 


§-S 


■g § 




Tear. 






^ 


!l 


- e 




e 53 


S.S 




ss 






S !~ 


|§ 


Is"^ 


^*5 




t-l 


Ex 


U 


"s 


»H 


1840 


762,838 


1,172,694 


$231,227,465 


82.9 


17.1 


1845 


904,476 


1,223,218 


231,901,170 


81.7 


18.3 


1850 


1,439,694 


1,797,825 


330,037,038 


72 5 


17.5 


1855 


2,348,358 


2,543,255 


536,625,366 


75.6 


14.4 


1860 


2,378,396 


2,644,867 


762,288,550 


66.5 


33.5 


1865 


1,518,350 
1,448,846 
1,545,998 


3,318,522 
2,638,247 
2,219,698 


604,412,996 

981,896,889 

1,219,434,.544 


27 7 
35 6 
25.8 


62.3 


1870 


64.4 


1875 


74.2 


1880 


1,314,402 


2,637,686 


1,613,770,633 


17.4 


82.6 


1881 


1,297,035 


2,646,011 


1,675,024,318 


16.0 


84.0 


1882 


1 ,259.490 


2.873,638 


1,560,071,700 


15.5 


84,5 



From this it appears that our tonnage employed in foreign 
trade is only one-half as great as it was in 1855-60, while our 
tonnage employed in the coastwise trade has slig'htly increased, 
some of it being interfered with by our rapid railway develop- 
ment. 

/. English subsidies to vessels an efficient form of protection. 
— When Great Britain seduced us in 1815 into applying free-trade 
principles to our ocean-carrying trade, she did not agree not to 
subsidize her own vessels. While she invited our vessels to free 
competition, she subsidized her own, thus playing against us witli 
loaded dice. 



WITHDRAWING SUBSIDIES. 657 

About 1840 * Cunarcl secured a subsidy of £60,000 per year for 
a montbly line of steamers between Liverpool and Halifax and 
Boston, which was increased in 1849 to £90,000. Soon after the 
United States government granted a subsidy to the Great West- 
ern Steamship Company, or ' ' Collins " Line. Cunard thereupon 
obtained from England an annual subsidy of £145,000 for a line 
to New Yoi'k, and in 1849 testified before the Committee on Con- 
tract Packet Service : " If I had got this contract three months 
sooner there would have been no American line." Mr. Colburn, 
Chancellor of the Exchequer, admitted having sustained the 
Cunard coinpetition at very heavy expense, but said it was not 
right to place that expense to the account of the post-office. 
(Hansard, Ixiv. 321.) 

On June 14, 1858, through the influence of Robert Toombs 
of Georgia, and as one of the measures preliminary to an expected 
dissolution of the Union, an act was passed limiting the Post- 
master-General and forbidding him to make a contract for carry- 
ing ocean mails to run more than two years or to involve a higher 
expense than sea and inland postage. At that date the Cunard 
Line was working under an eleven years' contract, with an annual 
subsidy of £191,400. 

This law destroyed the Collins Line, and the Havre and Bremen 
(American) lines followed within a year or two after. 

The report of the Committee on Contract Packets, made to Par- 
liament in 1853, says : ' ' The objects which appear to have led to 
the formation of these contracts, and to the larger expenditure 
involved, were to afford us rapid, frequent, and punctual com- 
munication with distant ports which feed the main arteries of 
British commerce, and with the most important of our foreign 
possessions, to foster maritime enterprise, and to encourage the 
production of a superior class of vessels which would promote the 
convenience and wealth of the country in time of peace, and 
assist in defending its shores against hostile aggression." 

It referred to the Cunard subsidy as having grown to £173,340, 
or at the rate of $2.72i per mile (traveled), and £61,642 in excess 
of the postage received. 

In an examination of witnesses before the Parliamentary Com- 
mittee on Packet and Telegraph Contracts in 1859, the following 
questions were asked : 

By Richard Cobden — 

* Edward P. North in forthcoming article in North American Bevieiu. 



658 ECONOMIC PHILOSOPHY. 

Q. 558. You are aware that it (the Collms Line) ceased because 
the American government withdrew tlie subsidy ? 

By Mr. Wilson— 

Q. 613. Mr. Cunard's contract is £191,000, is it not ? 

A. Yes, £191,400. 

Q. 617. £320,000 is the amount which is now paid by this 
country and the colony for the trans-atlantic jpostage, including 
the Galway Line ? 

Q. 618. And in the face of these increasing subsidies the 
American government has altogether relinquished the practice 
of subsidizing their vessels, and their vessels of course have been 
driven off the passage ? 

International contempt, for the folly of any class of public 
dotards and imbeciles, v/as never more heartily expressed than in 
questions 558 and 618, in which the English free traders, Cobden 
and Wilson, record their scorn for the stupidity and uupatriot- 
ism of their American dupes and allies. 

In a letter in the London Times of September 28, 1886, from 
J. Henneker Heaton, M. P. for Canterbury, to the Postmaster- 
General Raikes, in reply to the assertion of the Secretary of the 
Treasury, that " we " (Great Britain) "are losing £1,000 a day, 
£365,000 a year, by our ocean mail service," he says: "As a 
matter of fact these subsidies are not paid to make up a deficiency 
in the postal accounts, but in order to keep up the character of 
our merchant fleet." Until three years ago, England was the 
only European country sending regular, and fast, steamships to 
Australia. Since then the French government subsidized the 
powerful Messageries Maritimes to the amount of £160,000 a 
year, and now the four- weekly steamers are to be changed to 
fortnightly, with £250,000 a year. The Gex'nian government 
also established a splendid line of steamers to Australia with a 
subsidy of £120,000 a year. 

In a report issued by the British post-office in 1863 it is said : 
"To assume that these packets were only established for post- 
office purposes is to charge the government with the most absurd 
extravagance. The, West India jDackets, for instance, wei'e 
established at a cost of £240,000 per annum, though the utmost 
return expected from letters was £40,000, leaving the £200,000 a 
clear deficit." 

After 1858 all the " subsidy " American vessels were getting 
was two cents postage per letter for carrying mails which they 



ENGLISH SUBSIDIES WIN. 



659 



would freely liave paid fifteen cents to avoid carrying. The 
subsidies to English vessels were as follows : 





Bounty or subsidy 


VALUE OF TOTAL 


[MPORTS AND 


Years. 


paid British ships 


EXPORTS. 




by British Govern- 














ment. 


American Ships. 


Foreign Ships. 


1848 


$3,250,000 


$238,300,163 


$70,775,896 


1849 


3,180,000 


220,915,275 


72,697,984 


1850 


5,313,985 


239,272,084 


60,764.854 


1851 


5,330,000 


316,107,239 


118,505,712 


1853 


5,510,635 


294,735,404 


123,219,817 


1853 


5,865,400 


346,717,127 


152,237,677 


1854 


5,950,559 


406,698,539 


170,591,875 


1855 


5,741,633 


405,485,462 


131,139,904 


1856 


5,713,560 


482,268,274 


159,336,586 


1857 


5,133,485 


510,331,027 


213,517,796 


1858 


4,679,415 


447,191,304 


160,066,267 


1859 


4,740,190 


465,741,381 


229,816,211 


1860 


4,349,760 


507,247,757 


255,040,693 


1861 


4,703,285 


381,516,788 


203,478,278 


1862 


4,105,353 


217,695,418 


218,015,296 


1863 


4,188,275 


241,875,472 


343,056,031 


1864 


4,503,050 


184,061,486 


485,793,548 


1865 


3,981,995 


167,402,492 


437,010,124 


1866 


4,227,018 


325,711,961 


685,226,691 


1867 


4,079,996 


296,998,387 


580,022,004 


1868 


4,047,586 


297,981,573 


550,546,074 


1869 


5,481,690 


289,956,772 


586,492,012 


1870 


6,107,761 


352,969,607 


638,927,282 


1871 


6,070,741 


353,664,172 


755,822,576 


1872 


5,693,500 


345,331,101 


839,346,362 


1873 


5,665,296 


346,306,597 


966,722,651 


1874 


5,697,346 


350,451,994 


939,206,106 


1875 


4,860,000 


314,257,792 


884,788,517 


1876 


4,420,271 


311,076,171 


813,345,987 


1877 


3,976,580 


316,660,281 


859,920,536 


1878 


3,914,990 


313,050,906 


876,991,129 


1879 


3,768,230 


272,015,692 


911,269,332 


1880 


3,873,130 


280,005,097 


1,309,466,796 


1881 


3,601,350 


238,080,603 


1,378,556,017 


1882 


3,538,835 


242,850,815 


1,284,488,861 



The difficulty of finding commercial vessels, carrying the 
American flag over ocean traffic, is not quite so great as our free- 
trade enemies contend, but such as it is, it is all due to free-trade 
principles, applied in four ways, viz. : 1. Opening our ocean- 
carrying trade to free competition ; by treaty of 1815, no pro- 
tection whatever has been given to our ocean-carrying trade 
for seventy years. If it has failed, it has failed on the free- 
trade basis, and its failure must be chai'ged up to free-trade 



660 ECONOMIC PHILOSOPHY. 

px'inciples only, viz., getting our carrying done by the cheapest 
carrier. 2. Withdrawing protection from iron and steel manu- 
facture, by tarifPs of 1833 and 1846. 3. The war of the South for 
secession, professedly to establish free trade. 4. The war on 
American shipping by English cruisers in 1861-5 in the interest 
of British free trade. 

g. The Transition from Wood and Sails, to Steam and Steel. 
— Doubtless, had we, from 1816, or even from 1833, adequately 
protected our iron and steel manufacture, the throwing open of 
our ocean-carrying trade to a free scramble between us and other 
nations might have continued to be void of harm to us. For, 
in that case, we might have been pi'epared, by 1855, to pass from 
small wooden ships to large iron and steel, and from sails to 
steam, in competition with England. Necessarily England could 
only enter upon the iron and steel manufactui'e, to any consider- 
able extent, after the epoch of the locomotive, and its applica- 
tion to land and water locomotion, which was in 1828-30. The 
two free-trade policies combined, of throttling our iron and steel 
manufacture at home, and opening our ocean carrying trade to 
free competition with England, brought us to a condition in 
1850-55 where England was prepared for the great transition 
from small clippers to great iron steamers, and we were not. So 
long as the transition related merely to the change from sails to 
steam we held our own. In 1851 Great Britain herself had only 
65,921 tons of steam shipping engaged in the foreign-carrying 
trade, and the United States in the same year had 62,390 tons, 
being nearly equal. It grew until 1855, when we had 115,000 
tons. Thence it stood still, and in 1862 it was less by 2,000 tons 
than in 1865. Our sales of vessels to foreign ship buyers began 
to decline in 1855, and by 1860 were insignificant. The transfer 
of American ships to foreign owners during the war, to prevent 
capture, and the destruction of our ships by the war, together 
with the enormous impetus given to our internal indixstries, 
especially railroads, at th& return of peace, and the facts that 
capital invested in American shijis paid a state personal property 
tax, while that invested in foreign ships paid no tax whatever on 
the principal, and other facts conspired to deter American 
capital from investment in ships. In 1880 the fact developed 
in England and on the continent that in Europe there had 
been an over-production of ships. They were anxious to sell 
off their stock to Americans before the decline of values set in. 
An immense free-ship lobby, consisting about equally of English- 



THE " FREE SHIP" ERROR. 661 

men enlisted in the sliipping- interest, and of Americans who had 
never owned ships and never intended to, set up a cry for ' ' f I'ee 
ships," so that Americans coukl be induced to take the English 
surplus off their hands. There could be no interest whatever on 
the part of American capital to raise the cry. For if any American 
capitalist desires to become a ship-owner he can become a part 
owner in any English vessel, to any extent short of becoming 
an owner of the whole vessel. His capital will earn better 
dividends in an English than in an American vessel, for the 
three-fold reason that it will not be taxed for state and local pur- 
poses; that it will receive its share of about $6,000,000 a year of 
subsidies for cari'ying mails, and will not have to sustain the con- 
sular service, which in England is sustained by salaries, but 
among us by fees, which are a tax on the ship-owner. Now we 
come to the objections which exist to the free-ship fraud. 

h. Why Ocean-going Vessels must be Built by Ourselves. — 
Every registered American vessel has three aspects. If it could be 
built abroad it would be an imported product of foreign labor, and 
as such would compete in the American market with American- 
built vessels. Whether built abroad or here, it becomes in law part 
of our American soil, and entitled to be defended as such by the 
whole force of the republic. In return for this obligation to pro- 
tect it, the nation is entitled to take it for naval purposes, at an 
appraised value, if it wants it. By international law, however, 
and the laws of European states, the ship is protected from this 
right if it re-registers under a foi-eign flag before it is taken. Two 
considerations, therefore, are paramount in deciding whether we 
can afford to take these foreign craft and adopt or natui'alize them 
into our merchant marine. These are: First, will they be ours 
when we want them for war purposes ? For we do not want to 
take under our national protection a fleet of thousands of mer- 
chantmen which, at the first note of war with a foreign power, 
will slip back again out from under tjie American flag, and 
become British vessels. This point, in its turn, will depend on 
whether the capital owning and men controlling them would 
really be American, or whether it would continue British. Now, 
as American production had no motive of profits to invest in a 
naturalized English ship, which would not have been fully met 
by its existing privilege of buying shares in foreign ships, it may 
be assumed that the capital embarked in the Americanized vessels 
would continue to be in their Englisli builders and mortgagees. 
So long as we built our railroads of EngUsh rails, they remained 



1562 ECONOMIC PHILOSOPHY. 

English investrrieiits to the end. Presumptively English-built 
shi,ps would remain the property of their English builders, and 
nine of the transfers out of ten would be merely colorable, or, if 
made in good faith, would retain the core of the watermelon in 
the form of bottomry liens in behalf of English mortgagees. This 
being so, at the first speck of war they would all return to the 
English flag. They would not perfoi'm the function for which 
alone we give them national protection. 

A second consideration would be, whether we would admit them 
to, or exclude them, from the coasting trade. The framers of the 
free-ship bills — Codmans, Wells, and the Free-trade League — all 
asserted that they did not seek admission to the coasting trade. 
But, obviously, it would be absurd to have a class of American 
vessels sailing from New York to Havana, who would be liable to 
forfeiture if they touched and took cargo at Savannah, in Georgia. 
It was obvious that the coasting trade also must be open to them, 
if they were to be American vessels. But to open our coasting 
trade, to the competition of all the world, would destroy the last 
vestige of our ship-building, close every ship-yard, and leave us 
with a fleet of foreign-built and foreign-owned vessels, who, at 
the first sound of war, would return to their foreign flag. 

i. Liberality of English Subsidies Contrasted with American 
Parsimony. — The British government dispenses its subsidies at 
the discretion of the Board of Admiralty. Though the carrying 
the mails is made a condition of the subsidy to each line, yet the 
amount of the subsidy is graduated by the judgment of the Ad- 
mii*alty as to the probable deficit in the earnings of the company 
to sustain the route, and not by the value of the mail service to 
be rendered. , The payments of subsidy are also annual sums in 
gross to the line, and not a postage per letter. From 1850 she 
paid $705,666 per year to the Cunard Company ; to four compa- 
nies she paid a total of $4,523,666 per annum, graduated accord- 
ing to their needs. Fix)m 1848 to 1854 she paid, to bring her steam 
fleet up to 304,559 tons, a total of $23,390,020— a subsidy equal to 
$93 per ton, which is more than such a fleet would sell for to-day. 
She also induced Brazil, and other countries, to join her in subsidy 
schemes in favor of her own vessels, to the extent of $1,500,000 
per annum, making lier entire subsidy fund between 1849 and 
1854 $8,023,000 per year. From 1854 to 1860 England spent $36,- 
308,632 in subsidies on her steam merchant marine, and increased 
her tonnage from 304,559 tons in 1854 to 452,352 tons in 1860. 
From 1861 to 1865 England was making war on our commerce, so 



SA VING MONEY B T PIRA CT. 663 

much more effectively through the rebel pupate ships sent out 
from lier dock -yards, than she had been able to do by subsidies, 
and American competition in tlie ocean-carrying trade was so 
swiftly disappearing, that she rapidly reduced her subsidies, until 
in 1865 she paid less than at any time since 1849. Indeed, her 
economy had dated from the year 1854— the very year in which, 
under the pressure of her competition, our merchant marine began 
to decline. In 1854 England began to diminish her subsidies in 
consequence of the refusal of the American Congress to aid Amer- 
ican shipping, and in 1870, in consequence of the United States 
having for the first time granted a subsidy to the Pacific Mail, 
England for the first time jumped her subsidies up to a higher 
figure than they had been since 1854. In the intermediate period 
England had saved in reduced subsidies, compared with those 
she was payin-g while the United States was a successful competi- 
tor, exactly $19,472,094, or $5,000,000 more than was necessary to 
pay the Alabama claims, which was the whole cost of her war on 
our commerce. This will appear from the following schedule of 
the amounts saved by Great Britain, in subsidies, in each year 
after the decline of our commerce began, compared with her ex- 
pense for subsidies in 1854 : 

Saved relative-' 
Subsidies ly lo (he year 

Tear. paid. 1854. 

1854 $5,950,559 

1855 5,741,633 $208,926 

1856 5,713,560 236.999 

1857 5,133,485 817,064 

1858 4,679,415 1,271,144 

1859 4,740,190 1,110,369 

1860 4,349,760 1,600,799 

1861 4,703.285 1,347,274 

1862 4,10r,353 1,845,206 

1863 4,188,275 1,762,274 

From these figures it appears, that if England had set apart the 
sum she could save annually in subsidies by the effective demoli- 
tion of our ocean-carrying trade, as an insurance fund to indem- 
nify her against all cost of making war on our commerce, even 
to the extent of fitting out rebel privateers to destroy our vessels, 
she would have made a net profit, merely on her savings of $5, 000,- 
000, to say nothing of the fact that while these savings were going 
on she was increasing her shipping to 5,150,000 tons, valued at 
$1,000,000,000, all of which represented wages paid for British 
labor, and was giving employment to 240,000 men in the con- 
struction and repairs of her ships, and to 220, 000 more in sailing 
them, the latter of whom would increase her national earnings 
by $350,000,000 a year. 



Saved relative- 
Subsidies ly to the year 
Year paid. 1854. 

1864 $4,503,050 $1,347,509 

1865 3,981, £95 1,968,564 

1866 4,227,018 1,723,541 

1867 4,079,996 1,870,253 

1868 4.047,586 1,902,973 

1869 5,481,090 468,869 

1870 6,107,761 

Total ... $19,472,094 



664 ECONOMIC PHILOSOPHY. 

Between 1854 and 1882 Great Britain has paid in subsidies to 
her shipping $164,000,000, while the United States in 1881 actu- 
ally collected postage, on her mail matter going to foreign coun- 
tries, to the amount of $1,560,679.90, and paid for carrying all its 
mails to foreign countries only $239,141.21, thus taxing her mail- 
carrying ocean going ships, in the sum of $1,331,548.69 for bene- 
fit of the land mail service. 

224. Evolution of Manufactures in Canada. — The Liver- 
pool Cotton Circular about four years ago said : 

" This country has suffered very severely of late years, from the increasing stringency 
of foreign tariffs . There has been a growing tendency evinced in most countries to 
protect their own industries, and in every such case we are the [chief sufferers, for we 
live, as already said, by exchanging our manufactures for the necessaries of life. The 
United States was at one time a large customer for iron-ware and textile fabrics; but 
the hostile tariff she has enforced, since the civil war, has nearly driven us out of her 
markets, and has built up a vast system of manufactures, which completely supplies 
her own wants, and leaves something to spare for competition with us in foreign mar- 
kets. The freetraders of this country console themselves by thinking that she is the 
chief sufferer; but whether this be so or not (which is very doubtful) the fact remains 
that hi. r markets are almost lost to us, and we, on the other hand, are constantly more 
dependent upon her for food and raw material. For this we have no means of paying 
except by money or bonds, or indirectly by our credits with China, Brazil and other coun 
tries, from which America imports tea, sugar, etc. Our colonies all follow in the wake 
of the United States, and do their best to stimulate their own manufactures by closing 
their markets against ours.''' 

The significent statement that the British colonies all follow in 
the wake of the United States, notwithstanding the fact that the 
United States makes no effort to induce them to do so, while the 
British administration, and Parliament use every blandishment 
to persuade them not to do so, goes far to prove, as Bonamy Price 
says, that protection is an ineradicable instinct, and that, as Mr, 
Lester F. Ward "*" holds, government by coercion (and perhaps by 
tradition also) is rapidly giving place, throughout the world, to 
"government by attraction." The American Congress may well 
say to Gi^eat Britain, in the matter of her colonies, both American 
and Australasian, "We care not who appoints their Governors- 
General, so long as we inspire their tariffs." 

In 1879, largely under the leadership of Sir John A. Macdonald, 
Canada determined to protect certain of her manufactures, includ- 
ing cottons and woolens. We have referred to Prof. Sidgwick's 
ingenious argument that, on purely economic grounds, the North- 
western States (Michigan, Indiana, Illinois, Iowa, Wisconsin, and 
Minnesota) would gain by the more rapid advance in manufac- 

•' Dynamic Sociology," by Letter F. Wurd, S vols. 



OAjS'ABA gains. 665 

tures they would make if permitted by the Constitution to protect 
certain of their manufactures against the overwlielming competi- 
tion of the long-established manufactures in New Eiigland and 
Pennsylvania. Under the Constitution of the United States, this 
is a problem in purely speculative economics, as the "if" in the 
way of its practical realization is probably insurmountable, and 
certainly so without changes in the American Constitution which 
would look like disintegration and are never likely to be asked for. 
Inasmuch, however, as American free traders by profession ask 
us why, if a tariff is good to protect New England from old En- 
land, would not a tariff be equally good to protect the Northwest 
from New England, we have, therefore, placed side by side the 
results of the adoption of the protective policy in Canada, with 
the economic results of that inability to adopt a protective policy 
as against New England and Pennsylvania, which pertains to the 
Northwest as a section, by force of the inhibition contained in the 
Federal Constitution. We do this because we do not desire to 
blink or evade any issue legitimately collateral to the protection 
policy. There are grounds for holding with Prof. Sidgwick 
that the Northwest would for a period make an economic gain, 
through the more rapid advance in manufactures which would 
ensue, if the Northwest were free to protect their manufactures 
of cottons, woolens, paper, iron, and steel against their Eastern 
competition by some means more effectual than mere cost of 
transportation. 

The results of four years of the protective policy in Canada, as 
exhibited in a recent report of Mr. William T. Patterson, secre- 
tary of the Dominion Board of Trade, as well as of the Board 
of Trade and Corn Exchange of Montreal, are to increase nearly 
threefold every department of the cotton manufacture, as appears 
from the following summary of the progress made between 1879 

and 1883 : 

Seven mills Twenty mills 

in 1879. in 1883. 

Total capital employed $3,100,000 $8,500,000 

Aggregate raw material used per annum, lbs 13,800,000 38,470,000 

Quantity of cloth produced, yards 38,000,000 115,000,000 

Approximate value of annual production $3,745,000 $10,400,000 

Spindles, number 134,000 472,000 

Looms, number 2,940 9,950 

Employees, number 2,265 10,200 

Amount of wages paid per annum $556,000 $1,110,000 

Value of fuel consumed $45,000 $215,000 

Value of chemicals $20,000 $125,000 

In the manufacture of woolens, the census makes the following 



Capital. Employees. 


Production. 


% 580,4ir 901 


SI, 498,343 


630.821 1,556 


1,385,730 


5,272,376 6,877 


8,113,055 



666 ECONOMIC PHILOSOPHY. 

exhibit, it being premised, however, that many of the woolen 
factories are of the very smallest kind, and that the number 
of mills will be likely to diminish, rather than increase, with the 
future expansion in the volume of business : 

Number. 

Carding and fulling mills 439 

Hosiery manufactories 83 

Woolen cloth making 1,281 

The lines of production in cotton goods are, besides the 115,- 
000,000 yards of cotton cloths, brown sheetings and shirtings, 
bleached and fancy shirtings, apron checks, nuns' stripes, denims, 
ticks, ducks, cottonades, crochet and knitting cottons, beam 
warps for woolen mills, 8-4, 9-4, and 10-4 brown sheetings, 
drills, bags, wadding and batting, cheviots, canton flannels, shoe 
ducks and drills, pocketings, wigans, etc. In woolens they are 
tweeds, cassimeres, etoffes, flannels, blankets, serges, beaver, 
presidents, diagonal and nap coatings, shoe cloth. 

Canada, therefore, has in four years built up a woolen manu- 
facturing industry about equal to that of New Hampshire or 
New York in the value of its products, and exceeding the com- 
bined woolen industries of Ohio, Illinois, Indiana, loAva, Wis- 
consin, and Michigan. The aggregate product of the woolen 
mills of the latter States is as follows : 

Ohio $1,084,323 

Indiana 2,728,347 

Illinois! 1,896,460 

Iowa 435,747 

Michigan 481,517 

Wisconsin 1,480,069 



Total $8,107,463 

Yet the population of these six States aggregates 12,831,282, 
while the entire population of the Dominion of Canada is only 
4,000,000 persons, or less than a third of these six States. More- 
over, every one of these six States is better fitted for both growing 
sheep and manufacturing woolen goods than is any part of 
Canada, and has a larger market of purchasers, 

Canada has bravely imposed upon herself the protective duties 
necessary to bring about this degree of industrial development. 
Yet the rise in Canadian prices of woolen and cotton goods is so 
slight that the strolling conventions of New York free traders, 
sent out annually to hold sessions in the Western States, continue 
to speak of Canada as the country of cheapness relatively to the 





1878. 


1884. 


No. of hands, 


43,794 


77,346 


Yearly wages, 


$13,833,733 


$24,396,165 


Capital invested, . 


$37,819,931 


$67,293,373 


Yearly output, 


$49,966,282 


$102,870,166 


Industries visited, 


1,501 


2,135 



IK SIX YEARS. 667 

Uuited States. In fact, however, tlie United States have long 
since reached low prices in both cottons and woolens through 
domestic competition, and the Canadians are content to expand 
their prices in some degree, if they see it to be necessary, to build 
up a diversified system of industry. 

Ill 1884 the facts above stated for 1883 were extended and 
amplified in the report of the commissioners on the effects of the 
tariff for five years. The following is, in the main, their sum- 
mary of its effect on the development of manufactures in the 
provinces of Ontario, Quebec, New Brunswick, Prince Edward 
Island, and Nova Scotia : 

Increase. 

34,553 

$10,562,432 

$29,473,443 

$52,903,884 

634 

The increases have therefore been as follows : 

Per cent. 

Number of hands increased, 80.74 

Yearly wages increased, 76.35 

Capital invested increased, . 77.96 

Yearly output increased, 105.90 

The industries embraced are the foundry business, the furni- 
ture, machinery, implements, iron, tobacco and cigars, knitting, 
leather, brushes and brooms, woolen, wooden, confectionery, 
boots and shoes, metals and tinware, x^aper, musical instruments, 
clothing-, general industries, and cotton factories. The Canadian 
mode of gathering statistics shows both the increase in the 
capital, and the number of hands employed in the establishments 
existing in 1878, and the number of new factories. The increase 
in number of establishments and hands employed is from 50 to 
100 per cent, in six years in nearly all the industries. In cotton, 
factories it is greater, thus : 

Facioi'ies. Hands. Wages. Product. Capital. 

Factories, 1878, ... 4 1,361 $276,000 $1,151,000 $1,800,000 

Same factories, 1884, . . 4 2,126 445,000 1,872,000 3,350,000 

New factories, 1884, . . 13 2.375 502,500 2.530,000 3,448,000 

Increase of 1884 over 1878, . 13 3,140 671,500 3,251,000 4,998.000 

The number furnishing statistics is seventeen, four of which 
were in existence prior to 1879, and thirteen have been estab- 
lished since. The increase in the number of hands in this class 
has reached 210 per cent. The wages averaged $203.79 in 1878, 
,and $210.28 in 1884. 



668 ECONOMIC PHILOSOPHY. 

The total increase distinguishing the old factories from the 

new, in all industries, sums up thus : 

Factories. Hands. Wages. Product. Capital. 

Factories, 1878, . . 467 27,869 $8,174,900 $34,131,100 $26,160,500 

Same factories, 1884, . 467 42,080 12,870,900 53,554.500 36,647,400 

New factories, 1884. . 258 13,453 4,040,900 23,712,000 11,777,700 

Increase of 1884 over 1878, 2.8 27,664 8.737,000 43,136,000 22,261,600 

The Canadians claim to manufacture saws and some edge- 
tools for export to tlie United States. They are doubtless not 
wholly insensible to the fact that the reason why they are per- 
mitted to enact protective tariffs against England, while Ireland 
and India ai'e not, is that, while theoretically they are under the 
paw of the British lion, potentially and influentially they are 
under the wing of the American eagle. Their particular freedom 
to enact protective tariffs, they owe much more to the potency of 
their geographical environment, than to the recommendations of 
their British cousins. 

225. The Sheep and "Wool. — The sheep is pictured as a 
source of wealth, closely connected with man's welfare, on the 
monuments of Egypt, is mentioned in the Vedas of India, in the 
Chinese Chou-King, the Persian Zend Avesta, and appears as an 
article of religious sacrifice in the fourth chapter of Genesis. 
Everywhere, therefore, he accompanies man on his entry into the 
historic period, and certain writers,* attempting to probe the mists 
of antiquity, perhaps, by the help of imagination, discern the fii'st 
recorded social contest, in the preference of one class for the pas- 
toral life, and of another class for tilling the soil. The triumph 
of the farmer over the shepherd is, they think, typified in the 
murder of Abel by Cain. If this fancy be true, the history 
most familiar to the western world opens with an economic con- 
test between the two classes of workers. 

It is believed that the merino sheep of Spain is descended from 
the Tarentine sheep of the Romans, which were known to the 
Romans as "Greek sheep," being remarkable for the silky fine- 
ness of their fleece. The Greeks and Romans owed much of then* 
material wealth to their wool industry. One patrician be- 
queathed by will 200,000 sheep to Augustus. The farming of the 
Roman Empire was largely of the kind now known as " bonanza 
farming," or "gx-eat ranch" grazing. f Wool depends for its 
value much upon the progress made in the other arts, and espe- 

* Goldziher '-' Mythology of the Hebrews. " 

t " The Fleece unci the Loom," an address by John L. Hayes. 



WOOL AND WOOLENS. 669 

cially in scouring, and dyeing, in spinning and weaving, in 
navigation, loom construction, and ultimately in the iron and 
steel manufacture. The Roman purple was a woolen cloth, 
worth four dollai'S per pound before dyeing, and one hundred and 
sixty dollars per pound when colored with the Tyrian dye.* 
This dye has for many centuries been numbered among the lost 
arts, but in 1856 a new dye of perhaps nearly equal value was 
made from coal tar. 

The woolen manufacture preceded banking, as the basis of the 
modern revival of industry and the consequent revival of art, in 
the twelfth and the thirteenth centuries, in Florence, Venice, Pisa, 
and Genoa. Then the woolen manufacture passed to the Nether- 
lands, and from thence under Charles V. to Spain, France, and 
England. 

In the time of Nero, accordmg to Pliny, Babylonian couches 
woven of wool rose to a value of four million sesterces, or $640,- 
000. The name of Spinner on our treasury notes, and of our great 
orator, Webster, indicate a descent from an ancestry of spinners 
and weavers. The American Wool Growers' Association is pre- 
sided over hj a president whose name, De Lano, indicates that 
his French ancestors were also wool-raisers. 

Edward III., in the latter part of the fourteenth century, began 
the systematic encouragement of the wool industry by the En- 
glish government. Prior to that time the English produced 
wool chiefly to sell to the Netherlands, making up only the com- 
monest and coarsest of their own cloths.f One parliament was 
summoned expressly to encourage the wool product and manu- 
facture of woolens. It prohibited the importation of cloth and 
the export of rams, and forbade the wearing of foreign cloth. Soon 
the prohibitions wei-e changed to duties. So effective was the 
policy that, while at the beginning of his reign more than half 
the cloth worn in England was imported, in his twenty-eighth 
year the exports of cloth were three-fold the imports. 

During the next five centuries three hundred and eleven stat- 
utes were enacted for the protection of the woolen manufacture. 

* "The Fleece and the Loom," by John L. Hayes. 

t The author of the " Golden Fleece " says of Edward III. : " He saw that the sub- 
jects of the Duke of Burgundy, receiving the English wool at sixpence a pound, re- 
turned it through the manufacture of that industrious people in cloths at ten shillings, 
to the great enriching of that state, both in revenue to their sovereign and employment 
to their subjects . He at once proposed how to enrich his people, and to people his new 
conquered dominions ; and both these bo designed to effect by means of his English 
cnminnditv.. wool." 



670 ECONOMIC PHILOSOPHY. 

The export of wool, after being several times suspended, was 
definitely prohibited in 1660, and so continued until 1825.* The 
exportation of fuller's earth, and of sheep, were forbidden under 
severe penalties. Sheep-shearing' within five miles of the sea was 
forbidden, except in presence of a revenue officer to prevent the 
export of the wool. To prevent a monopoly of the profits of 
wool production, the number of sheep to be kept by one person 
was limited to 2,000. All burial shrouds were I'equired to be of 
woolen, as well as all black cloth worn at funerals. But the ex- 
port of woolen clotlis was at length permitted free.f 

Ireland, and the English plantations in America, were forbid- 
den to export woolen cloths. | At first the wearing of Indian 
calicoes was forbidden, and when the cotton manufacture in 
England was getting well under way, British calicoes were still 
restricted to those of a blue color, lest they might interfere with 
the woolen manufacture. The East India Company would ex- 
port none but British cloth, from its foundation to 1828. Portu- 
gal, which, until 1703, had supplied both her own people and 
Brazil with woolen goods, was cunningly induced by certain 
favors given to Portuguese wines by England to admit English 
woolen goods free. This ended the Portugese wool and woolen 
industry, and reduced Brazil to that industrial subserviency to 
England which is impei-fectly offset by her affinities in race, 
religion, and language to Portugal. 

For four years only, from 1819 to 1823, were the English wool- 
growers able to secure a duty on foreign wool of sixpence per 
pound. 

Wool was styled "the flower and strength, the revenue and 
blood," of England. The lord chancellor of England presided 
over the House of Lords on a wool-sack, which gave its name to 
his office, as an emblem of the close association existing between 
the kingdom and its leading industry. § 

Lord Bacon, addressing the ministers of his sovereign, said : 
" Let us advance the native commodities of our own kingdom, 
and employ our own countrymen before strangei's. Let us turn 

* " The Fleece and the Loom," by John L. Hayes, p. 13. 

1 1st William and Mary. % 10 and 11 William III. 

§Theantiquitieof wool within thiskingdom hath been, beyond thememorieof man, so 
highly respected, for those many benefits therein, that a customable use has always been 
observed to make it the seat of our wise learned judges, in the si^ht of our noble peers 
(in the Parliament House), to imprint the memorie of this worthy commoditie within the , 
jDinds of those firm supporters and chief rulers of the land."— John May, 1G13. 



WOOL REQUIRES TIME. 671 

the wools of the land into cloths and stuffs of our own growth. 
It would set many thousands to work ; and thereby one of the 
materials would, by industry, be multiplied to five, ten, and, 
many times, to twenty-five times more in value, being wrought." 
A statute of William III. declares the woolen goods, naming 
their kinds, to be " the greatest and most profitable commodities 
of the kingdom." 

In short, England, in like circumstances and with a like popu- 
lation, was saying then exactly what Canada and Australia are 
saying to-day, that the ability to riiake its own woolen clothing 
lies at the basis of a nation's industrial independence. 

226. Wool a Finished Pi'oduct. — It is the custom of manu- 
facturers of woolen cloths to speak of wool as a raw material, be- 
cause it is the raw material of their particular industry, and each 
industry, provided it confines the meaning of the term to its own 
uses, may properly speak of that which it buys for re-manufac- 
ture into some other product as its " raw material," and of that 
which it produces for sale as its " finished product. " But this iise 
of terms becomes delusive and misleading when it is applied to 
the industries of an entire nation, for therein whatever is the raw 
material of one industry must have been the fi.nished product of 
some other. 

In fact it is a slower and longer process, to evolve wool of a 
particular grade, than to convert the wool when produced into a 
garment. At a fair m Georgia, wool which was worn by a sheep 
at sunrise as his natural coat, was worn by the governor of the 
State at a ball on the same evening — having undei'gone in so 
brief a time all the intermediate processes of washing, shearing, 
scouring, dyeing, drying, spinning, weaving, measuring, cutting, 
lining, basting, sewing, fitting, and ironing. But the process 
of developing the sheep by climate, food, care, and breeding, 
into a particular variety, is one of years or even centuries. 

The species is more susceptible of modification than any other 
animal except the dog, and as wool is capable of being transported 
to gi'eat distances without injury to its value, all the world may 
be said to compete in its production. Hence, the prime requisite 
of developing it is steadiness of policy over long periods of time. 
Subject to this condition, it has been said: " the breeder may 
chalk out on a wall a form perfect in itself, and then give it ex- 
istence. "* Hence, as Dr. Hayes remarks, ' ' that distinctness and 

* Lord Somerville, quoted in Bischoff on " Wool, Woolens, and Sheep," London, 
1843, p. 380. 



6V2 ECONOMIC PHILOSOPHY. 

variety of fabric which characterize the wool manufacture ; and 
thus we have the coarse Cordova and Donskoi wools for our 
carpets ; the noble electoral wools of Saxony and Silesia for our 
broadcloths; the strong middle wools of the Southdown and 
our native sheep for blankets ; the soft, long, and finer merino 
wools of France, Vermont, and Michigan for thibets, delaines, 
and shawls; the longer and coai'ser combing wools of the Cots- 
wold and Leicester races for worsteds in their thousand applica- 
tions; the very long and bright-haired lustre wools of Lincoha- 
shire for alpaca fabrics; and, lastly, the precious silky Mauchamp 
wool, the recent triumph of French agronomic skill, rivalling 
even the cashmere for shawls and the angora for Utrecht 
velvets." 

Wool is lighter in its actual specific gravity than cotton, linen, 
or silk,* is the best non-conductor of heat, and is the most inde- 
structible and durable of all the fibres. Its value as wool outlasts 
every garment in which it enters, and in the form of shoddy 
forms a valuable ingredient in the manufacture of new and often 
of very fine cloth. Very much of the economy of the English 
wool manufacture, for 40 years past, has consisted in its more ex- 
tensive utilization of shoddy .f 

The fibre of wool is not like that of silk, hemp, flax, and cot- 
ton, a straight and structureless homogeneity, but is "crisped 
or spirally curled, and is made up of cells of difi'erent kinds, the 
interior forming the j)ith, and the exterior consisting of serrated 
rings imbricated over each other, having under the microscope 
the appearance of a series of thimbles with uneven edges inserted 
into each other, these serratures, as well as the spiral curls, being 
more or less distinct, according to the fineness of the fibre." | 
This is the reason why wool alone of all the fibres can be made 
into felt, as in hats and broadcloths. Wool also receives and 
holds dyes persistently, and hence gives rise to garments which 
will wash without change of color. 

227. Rate of Consiimptiou of Wool. — About a pound and 
a quarter of wool are produced for each inhabitant of the globe ; 
but in the richer countries, as France, England, and the United 
States, the consumption of wool reaches from four to seven pounds 
for each person per annum. It may be said that a nation which 
feeds as many sheep as it contains of human beings, Avill not need 

♦ Hayes' ' ' Fleece and Loom,"' p. 5. t Chambers' Encyclop. Art. " Wool." 

X Hayes' " Fleece and Loom,'" p. 5. 



WOOL C0N8TIMPTI0N. 073 

to import wool for its own consumption. The United States, with 
58,000,000 people and 45,000,000 sheep, imports about as much 
wool as from 3,000,000 to 13,000,000 more sheep would produce. 
Austro-Hungary, with 38,000,000 people and 14,000,000 sheep, 
needs more wool. France, with 23,000,000 sheep, is more depen- 
dent on imports for wool, and on exports for its markets of cloths. 
Yet the home consumers constitute, in the main, its market. 

Englaud in 1855, out of a total supply by production and im- 
portation of 250,000,000 pounds, retained for use in her manufac- 
tures 81^ per cent., and exported as wool 18^ percent., leav- 
ing her somewhat more than six pounds per capita to supply 
both her manufacture for home use, and her export of cloths and 
clothing. The subsequent ratio of supply to consumption has 
been as follows, in millions of pounds : * 

1869. 1880. 1883. 

Total Supply 4661^ 7291^ 732 

Exported 129 2543^ 296J^ 

Retained in Great Britain 33714 475 4353^ 

Per cent, retained 7234 65 593^ 

Per cent, exported 27% 35 403^ 

Meanwhile the growth of the export of woolen goods in quan- 
tity represents a considerable decline in value, and hence a cor- 
responding decline in the power to support labor. Between 1880 
and 1885 the value of the woolen exports of Great Britain de- 
clined from £129,000,000 to £85,000,000, and the number of per- 
sons employed in the manufacture has within 20 years declined 
by 5,000 persons. The consumption of wool in America now in- 
cludes a domestic production of 370,000,000 pounds, and an im- 
portation of about 90,000,000 pounds, all of which is consumed 
in the manufacture of woolen goods for the wear of the Ameri- 
can people without export. It seems that the consumption of wool, 
in actual wear in America, rises to about 6| pounds per capita, or 
very exactly the same as the like consumption in the United 
Kingdom. 

228. The Protectiou of Wool and Woolens iu Europe. 
— In France the evolution of the woolen industry was closely re- 
sultant from and dependent on the action of the government. 
Colbert, the minister of Louis XIV., made attractive offers to 
foreign artisans, distributed 50,000 livres in encouraging the wool 
industry, and attracted Van Robais from Holland, by a patent is- 
sued to him for manufacturing fine cloths, after the fashion of 

* J. L. Bowes & Bros.' Annual Wool Tables. 18o3. 



674 ECONOMIC PIIILOSOPHT. 

Spain and Holland. Thiers attributes the credit of introducing the 
manufacture of cloths into France to Colbert. He imposed 
heavy duties on the importation of foreign cloths, modified the 
wool of the French flocks by imported breeds, and is regarded by 
Carey as the father and founder of the Protectionist School of 
Statesmen. Under Louis XYI. merino sheep were extensively 
introduced into France. Once, in 1786, France was weak enough 
to enter into a treaty with England, whereby in exchange for 
certain expected favors in the admission of fine and high-priced 
French cloths in England, English low-priced goods were ad- 
mitted at low duties into France. As the finer and moi'e improved 
branches of any industry must always be the outgrowth of the 
previous success of the coarser and cheaper grades, a fatal blow 
was struck by this treaty at the entire woolen industry of France, x 
from which the country had not recovered at the outbreak of the 
French Revolution of 1793. 

Napoleon was as vigorous a protectionist toward wool as to- 
ward beet sugar. ' ' Spain, " he said, ' ' has twenty-five millions 
of meinnoes. I want France to have a hundred millions ." * He 
established sixty additional sheep-folds for blending French with 
Spanish breeds. One of his chief military designs was to shut 
English manufactures out of Europe by a reciprocal blockade. 
Visiting the calico-printing works of Oberhampf , he said, ' ' We 
both have a war with England, but I believe the noblest is 
yours." Indeed, protection has been thought a chief cause of 
Napoleon's success and popularity in France, as well as a leading 
element in his usefulness. 

The Jacquard loom was the product of this inventive period. 
Dyeing was brought to high perfection. Great manufacturing 
towns arose out of the profits of newly born industries. By 1851 
a million and a quarter persons were employed in the woolen 
manufacture in France, Germany, Austria, Russia, Spain, Switz- 
erland, and Sweden, all strenuously seeking to nurture their 
flocks and spindles, by protective duties, against undue foreign 
competition. 

Had the continental nations, at the close of the wars of France 
with the allied powers in 1815, given England free trade in 
woolen goods, she could have spun and woven, temporarily at a 
lower price than any of them, every pound of cloth needed on 
the continent. This temporary ability would have concentrated 

* Berneville, p. 133. Hayes' " Fleece and Loom," 27. 



MANY FORMS OF PROTECTION. 675 

the woolen manufacture, for all these countries, in England and 
would have deprived them of their own. Ireland, Portugal, Tur- 
key, India, and to some extent China and Japan, were con- 
quered, dragooned or purchased to adopt this policy. France, 
Spain, Austria, Russia, Switzerland, and Sweden owe their 
woolen nianufactures to their adherence to the protective policy. 
Nor is there any doubt whatever, in the mind of any statesman, 
that the ultimate effects of this dispersion of industries among 
nations secures a more abundant supply to the people of each, at 
a far lower labor cost, than if the policy of immediate cheapness 
had been pursued. Cheapness in obtaining for a while a supply 
of a particular kind of goods is of very little value, when com- 
pared with cheapness in the processes whereby such goods ar^ 
produced. The former is a transient good. The latter is a per- 
manent good. The processes whereby products are caused to be, 
can only be made cheap by multiplying the cii'cumstances under 
which they are produced, and the variety and number of the 
agencies employed to produce them. This is done, by the nations 
generally, when each protects its own industries. 

Whether such protection is effected by laying out roads, so as 
to aid its producers in marketing their crops as cheaply as their 
competitors in other lands; or in educating its people so as to de- 
velop their caj)acity for skilled industry, in a degree equal or 
superior to that of other coun tries ; or in granting to inventors 
of new machines, authors of new books, and discoverers of 
new substances, processes, or compounds, the exclusive profits of 
their inventions for a term of years ; or whether it seeks, by im- 
port duties, to protect its industries, by securing to those who invest 
capital and labor in conducting them, at a period when the profits 
are rendered hazardous by foreign competition, a better hold on 
the home market than is given to the importer ; or whether it 
maintains armies and colonies in various parts of the earth, and 
subsidizes the lines of steamers which communicate with them, so 
as to secure to the coercing nation the lion's share of the trade of 
these colonies, or of the nations of overawed and browbeaten bar- 
barians among whom such armies and stations are established — 
all these are mere modifications of the form of protection, and all 
have but one end in view, viz. , to adapt the mode of protection 
to the interests of the people of the dominant class, occupation, or 
country, never to those of the subservient country, class, or occu- 
pation. 

It is in this broad sense that the policy of protection, to the 



676 EGONOMIG PHIL080PHT. 

home industries of the class, occupation, and country which leg- 
islates, may be said to be the intended policy of all nations, and 
especially of Great Britain. The withdrawal of j)rotection from 
farmers, so far from being- an exception to this rule, illustrates 
it. The farmers had ceased to be, even proximately, the domi- 
nant class ; the manufacturers thought it to be for their protec- 
tion to take the duties off bread-stuffs, and as they outnumbered 
the farmers, their form of supposed and intended protection 
won. 

229. Wool Culture in America. — The colonial period wit- 
nessed the colonial legislatures uniformly trying to develop wool 
growing and woolen manufacturing, while the British parliament 
was trying to repress at least the manufacture. Massachusetts 
bountied the killing of wolves, and Delaware and Virginia pro- 
hibited the exportation of sheep and of raw wool. The first gen- 
eral congress of deputies, meeting at Annapolis, in 1774, as well 
as the provincial congress of Massachusetts of the same year, the 
convention of Virginia, and the assembly of Pennsylvania, all 
adopted protective measui'es toward wool growing, and looking 
to its manufacture. 

In 1800 the first merino stock was introduced, aiid a mill was 
erected for manufacturing "fine wool." In the restrictions on 
trade incident to the Napoleonic wars, in 1809, fine merino wool 
rose to $3 per pound, full-blood Spanish meriuoes rose to $1,500 
in special instances. Even as late as 1820, twenty- five merino 
sheep brought $5,900 in Philadelphia. Still, until 1824, no duty 
was imposed on the importation of raw wool. That act imposed a 
duty for the first year of 20 per cent., for the second of 25, and, 
after 1826, of 30 per cent, on all wool whose invoice price abroad 
exceeded ten cents, and on such 15 per cent. Mr. Thomas H. 
Benton tried to make it a progressive duty, increasing at 10 per 
cent, per annum until it amounted to 50 per cent. , and then at 
5 per cent, until it reached 70 per cent. Though the compromise 
act of 1833, and the acts of 1846 and 1857, reduced the protective 
efficacy of the duties on wool, its importation has never been free 
since 1824. 

In 1810 the first wool had been exported from Australia, and in 
1820 the export had risen to only 99,000 lbs. By 1830 it had 
reached 1,000,000 lbs, and the export from South America in- 
formed our fathers of that day that for us free wool would mean 
but little wool, and that of poor quality and dear. 



FRUITS OF PROTEGTIon TO WOOL. 



6Ht 



A high price for wool can only be maintained in conjunction 
with a large woolen manufacture, and a large woolen manufacture 
requires both cheap power and cheap looms. As both cheap 
power and cheap looms depend largely on cheap iron and steel, 
the evolution of the woolen industrj^ in the United States fol- 
lowed close on tlie heels of the growth of the iron and steel in- 
dustry. 

The following (in millions) shows the increase in number of 
sheep and pounds of wool since 1850 : 



Census Years. No. of Sheep. 

1850 21f 

1860 22\ 

1870 28i 

1880. 43i 



Pounds of Wool. 

60i 
100 
2351 



From 1867 to 1883 the duties on wools and woolen goods were, 
in the main, such as had been suggested and approved by the 
combined associations of wool growers and woolen manufacturers 
of the United States, The essential principles involved in this 
tariff were that it is more important that, as a whole, the tariff 
should be effectually protective than that its schedule should be 
simple in its construction ; that cheap wool, as a raw material 
for manufacture, could most surely be had by maintaining an 
active home production of wool ; that America is sufficiently 
diversified in soil and climate to produce all varieties of wool 
needed by our manufacturers ; and that the interests of wool pro- 
ducers, woolen manufacturers, and the American consumers of 
woolen goods, are identical when periods of moderate duration 
are considered. Each of these positions has been contested by the 
advocates of the free-trade theory. 

The relative abundance of our total supply of woollen goods in 
1860 and in 1880 appears as follows : 



Year. 


Population. 


Foreign 
Supply. 


Domestic 
Supply. 


Total Supply 


Sup^ply^er 


1860 
1880 


31,44.3,790 
50,500,000 


S37,87fi,945 
33,023,8 sr 


$61.80.5,217 
237,587,671 


$99,772,162 
271,211,558 


$3.17 
5.37 



6*78 ECONOMIC PHILOSOPBT. 

Mr. Bigelow states the increase more specifically as follows : 



Itebis. 


1850. 


I860 


1868. 




Pounds. 


Pounds. 


Pounds. 


Pounds of wool grown . . 


52,516,959 


60,511,343 


177,000,000 




Value. 


Value. 


Value. 


Value of wool imported 


$1,618,691 


$4,842,152 


$3,915,262 


\aiue of wool manufactures 








imported 


17,151,509 


37,937,190 


32,400,759 


Value of domestic wool manu- 








factures .... 


45,281,764 


68,865,963* 


175,000,000 



Mr. John L. Hayes computes the rate of consumption per cap- 
ita at $4.31 in 1860, and $6.52 in 1880. 

What are the effects of existing duties on wool upon the Amer- 
ican price ? The duties, since 1866, have been from ten to twelve 
cents per pound on combing and clothing wools, and from two 
and a half to five cents per pound on coai'se carpet wools. The 
latter is generally regarded as a duty for revenue only, as we do 
not produce the article. The former would raise the price by the 
amount of the duty, if our country were producing very little 
wool relatively to the quantity required — say a fourth, half, or 
even two-thirds of the competing grades. But, in fact, we pro- 
duce nine-tenths of the competing qualities, and, if we produced 
the other tenth, our total production would make the price as low 
here as abroad, even if the duty were ten dollars a pound, or pro- 
hibitory. A duty on the importation of an article, which a. coun- 
try can have no need to import, because it produces as much as 
it desires to consume, can have no effect whatever on its price. 
The following diagram shows the ratio in weight of our home 
production of wool, of all kinds, to our importation. The greater 
part of the importation, as here indicated, is coarse carpet wools 
of a quality inferior to any we have yet sought to produce. 

Wools are of so many grades that their prices will range all the 
way from ten to fifty cents in the same market. Hence the com- 
parison of prices between different markets, or between two coun- 
tries, is difficult, and can be made only by experts. Mr. John L. 
Hayes, in a defense of a reduction of the duty, in 1883, states that 
the combing and clothing (fine) wools imported in 1880 were 2^,- 
785,171 pounds. The customs returns show that these were in- 
voiced at an average price of twenty-three cents per pound. 

* Bulletin National Association Wool Manufacturers, vol. xvi. No. 1, p 80. 



FOREIGN AND DOMESTIC. 



679 





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PBOPOETION OF WOOL PRODUCED TO THAT IMPORTED. 

Prices of wool were five cents lower in 1883 than in 1880. Yet 
the British Board of Trade returns show that the total import of 
wool of all grades and kinds, from Australia into England, in 1883, 
was valued at £17,066,476 for 326,517,520 pounds, or more than 
twenty -Ave cents a pound. Wool being five cents higher in 1880 
than in 1883, as shown by the accompanying chart, it would fol- 
low that the average on all grades of Australian wool in England, 
in 1880, must have been thirty cents, or seven cents per pound 
higher than combing and clothing wools were invoiced at, to bring 
them to the United States. Allowing another five cents for the 
difference in price between the average of all grades and the fine, 
it would follow that the combing and clothing wools brought 
into New York at twenty-three cents, in 1880, should have had a 
foreign price of thirty-five cents, or twelve cents higher than the 
invoice. This would indicate that the handlers of Australian 
combing and clothing wools made a " dip " on them, to get them 
into American markets, of twelve cents, or the whole amount of 
the duty. While Australian wools were at this period quoted at 
" good to superior fleece- washed mei'inos Is. 8c?. to Is. lOd. [forty 
to forty-four cents], and average to good Is. 3d. to Is. 8d. [thirty- 



680 ECONOMIC PHILOSOPHY. 

one to forty -one cents] per pound," and while Mr. Hayes, an 
expert, says that only the best long and fine wools (apart from 
carpet wools) are now imported, yet almost the entire quantity 
imported is invoiced at twenty-three cents per pound, a price 
which is three cents below the* foreign price of blanket wools. 

The conclusion is inevitable that the foreign price does " dip " 
by nearly or quite the whole duty, to accommodate itself to the 
American market, and, this being so, the president of the Wool 
Manufacturers' Association was right in testifying before the 
Committee of Ways and Means, of Congress, that the price of 
wool is not made higher by the duty. The Association was only 
wrong in making the duty on wool a part of the basis for esti- 
mating the duty on woolen goods. The duty on woolen goods 
should be estimated simply by inquiring the money rate at which 
the goods can sell in the foreign market, under the most favora- 
ble conditions, then the rate at which they can be manufactured 
here, and making the duty large enough to more than cover the 
difference at all times, and under all fluctuations in price. 

The annexed chart shows the facts above cited, as to the prices 
of wools. The average invoice price of twenty-three cents per 
pound applies to all years since 1880. 

The total wool product of the United States is now estimated at 
330,000,000 pounds,* which, adding 95, 000, 000 pounds for importa- 
tion, amounts to 415,000,000 pounds for 58,000,000 of people, or 
7xF pounds per capita per annum. The consumption of wool 
in 1860 could hardly have reached one-half as many pounds per 
capita. This goes far to sustain the theory tliat an abundant 
consumption is best attained through an abundant home pro- 
duction.! 

230. Woolen Industry of England. — Toward the close of 
the eighteenth century England, owing to the persistency which 
she had shown in developing her iron and steel manufacture, 
plunged into a series of inventions in mechanics which brought 
her into the front rank of nations as a manufacturer of woolen 
goods, and, at the opening of the present century, in cottons. 
These were the steam-engine by Watt, which for the first time 
superseded human power by steam power, and converted capital 

* Helmuth, Schwanze & Co.'s Circular, published by George William Bond in 1887, 
estimates product of North America a: 460,000,000 pouiuls. 

t Since 1884, however, owing to the threatened sacrifice of the wool producers, im- 
plied in the reduction of the duties on wool in 1883, the number of sheep in the United 
States has declined by about 6,000,000, or by 7.37 per cent. (Report for 1887 of Pennsyl- 
vania Wool Growers' Association.) 



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. Foreign Pnco of Emoat Wool 

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PROTECTION FORCING INVENTIONS. 681 

into the clieapest of all laborers — clieai^er even than coolie labor ; 
the roller-spinning of Paul, adopted by Arkwright, dispensed 
with linger a.nd hand-work in spinning, and drew and twisted 
the fibre in a continuous thread by an automatic mechanism ; 
then came the jenny of Hargreaves, which, instead of one, drew 
seventy threads at once ; then the mule of Crompton, which in- 
creased the power of the sjiinner a hundred-fold ; and the power 
looms of Cart Wright, which quadrupled the power of the weaver. 
Then came the factory system of Arkwright, which, by gathering 
many looms under one control, intensified production and in 
many ways saved labor, while it lessened, perhaps, the individu- 
ality and independence of the workers. Finally came the gig- 
mill by Mr. Gott, raising the wool on the cloth without manual 
labor, and the shearing frames, woi'ked also by power. By these 
inventions the consumption of wool in Great Britain rose to 94,- 
000,000 pounds of domestic wool, and 8,000,000 imported, by the 
close of the last century. By 1851, according to M. Bernoville,* 
the annual consumption had grown to 208,000,000 pounds, or 
more than double. In 1883 the total supply for the United King- 
dom had grown to 732,000,000 pounds, of which 296,000,000 were 
exported, leaving 435,000,000 poi;nds for domestic consumption. 
Tliough this gives the British people as large a supply of woolen 
goods, per capita, as is obtained by those of the United States, the 
source of that supply is increasingly foreign in England, and in- 
creasingly domestic in America. In England the wool grown in 
the kingdom declined from 140,000,000 in 1855 to 128,250,000 
pounds in 1883, while the imports increased five times. In Amer- 
ica the imports both of wool and woolen goods have remained 
stationary, or declined, while the domestic production has in- 
creased tenfold and the consumption about threefold. The in- 
ference is that the English wool and woolen industries are 
gradually leaving England to take up their abode in protective 
countries. 

So far as this ti'ansfer of industry is coincident with a like 
migration of English population to new countries, it may be 
ascribed to the various causes which help to make populations 
migratory, the chief of which is the migratory nature of profits. 
But so far as the rate of transfer exceeds that of population, and 
especially so far as the rate of transfer of a particular industry 
from a country wherein it is not protected by tarifi's to one where 

* " Industries des Laines Peignees," par M. Bernoville, p. 11. 



682 



ECONOMIC PHILOSOPHY. 



it is so protected exceeds the rate of transfer of industries which 
are equallj^ protected in both countries, such increased rate may, 
in the absence of the clear indication of other adequate causes, 
be fairly ascribed to the difference in the protection extended to 
them. 

Thus a period in which the British carrying trade, or commer- 
cial marine, is actively protected, and the American is not, is 
marked by a transfer of American vessels and sailors to Great 
Britain ; though if in the same period British farmers, wool grow- 
ers, and silk weavers are inadequately protected, and Americans 
in the same walks of life are either naturally or artificially pro- 
tected in an adequate degree, a transfer takes place of British 
farmers, wool growers, and silk weavers to America, above the 
ordinary migratory tendency of industry. 

231. The Cost of Protection to the Woolen Manufac- 
ture. — Among the familiar impositions of the free traders, is 
that of estimating the cost of protecting a domestic industry, by 
assuming that the whole domestic product is raised in price 
by the amount of the duty, or by some large percentage of that 
amount, and that it could all be obtained by importation at 
the price it sells for abroad when no importation occurs. Mr. 
Springer, of Springfield, Illinois, has worked up the cost of pro- 
tection to the American woolen manufacture, on this basis, as 
follows : 



Value wool im- 
ported 1882. 


Duty received. 


Average ad va- 
lorem rate. 


Value 
home products 
consumed 1880. 


Incidental 
taxes, being In- 
creased cost to 
consumers. 


$47,679,502 


$29,254,234 


61.36 per cent. 


$267,182,914 


$106,873,165 



As the wages paid in the manufactures of woolen goods amount 
to only $47,351,628, an argument is thus made out that it would 
be cheaper, to pay all these employees their wages, and to this 
might also be added the dividends paid to the mill-owners, than 
to pay the increased cost to consumers. Mr. Springer, however, 
impeaches all these figures, resolving them into solemn guess- 
work, by admitting that the domestic price is not increased by 
the amount of the duty, and that he does not know, and has no 
means of knowing, by what amount it is increased, or that it is 
increased at all. All this is admitted in the following words, 
which are Mr. Springer's, and Avliich ai'e uttered by him, not to 
give away his case, but to save it. He says: 



FIG URES THA T O UE8S. G 8 3 

' ' It will be seen, from an examination of the statement, that 
the rate of increase in the cost of the home product, by reason of 
the tariff, has been estimated in each case at much below the duty 
itself. This is due to the fact that many of the articles are in- 
ci'easedin price only to a limited extent by reason of the tariff.'' 

All these figures, hovvever, lose their value as means of estimat- 
ing the cost of the tariff, when the principle upon which they 
are marshalled is conceded to be false. This principle is that the 
price of the domestic product is raised by the amount of the duty. 
This Mr. Springer admits is false, by taking a different standard, 
viz. : a certain jDercentage of the duty, the rate of percentage being 
the result of pure guess-work on his part. Thus all this cumbrous 
superstructure of pretended argument from figures rests, at bot ■ 
torn, on a guess. The attempt to compute the exact cost of pro- 
tection, like the attempt to prove the net profit derivable from law, 
education, internal improvements, or any other function of gov- 
ernment, shades rapidly off into quantities that are immeasurable. 
It belongs to the domain of intellectual jugglery. 

The problem of the relation of the cost of protection to its ad- 
vantages is one that appeals to the sense of value, or profit- 
perception, or business judgment of all men. The production, per 
capita, of wool and woolen goods in the United States, has about 
doubled in the j^rotective period since 1860. The common sense 
of common men, and the special sense of statesmen, concur in 
holding that this more abundant production renders the Amei'i- 
can market as low-priced a market, on most kinds of woolen 
goods, as the world contains. Practical merchants having a close 
knowledge of markets concur in this opinion. Hence, the tax of 
pi'otection, while not actually computable, and while it is liable to 
undergo a theoretical variation with every change in prices, is 
really nominal on all varieties of goods that have had any consid- 
erable period for development under its infiuence. 

232. Cotton — Antiquity and Modern Growth of tlio 
Industry. — The cotton of commerce is produced by about 
twenty species of the genus Gossypium, in all of which the cotton 
wool is attached to the seed, for the physiological purpose of 
promoting the distribution of the seed, as thistle-down distributes 
the thistle seed. Most of these are flowering herbs approximat- 
ing to the hollyhock more nearly than to any other northern 
flower. Tlie exceptions are the sacred cotton tree of the Hindoos, 
•which produces a fibre used only in preparing the robes of the 
Brahmin priests, as its tripartite thread is held to be a sacred em- 



684 ECONOMIC PHILOSOPHY. 

blem of tlie Trinity, and the cotton tree of ancient Peru and 
Mexico, from whose product Cortes was presented with cotton 
garments, on his arrival in 1519. 

Cotton was largely used in the domestic manufactures of India 
five centuries before the Christian Era, and therefore twenty centu- 
tries before it was largely raised, spun, or woven in the European 
world. Its culture and manufacture reached China about B.C. 
300. Its extension to Turkey, Egypt, and Africa has been made 
smce its culture in the United States made it a leading article of 
modern commei'ce, 

The Hindoo used the distaff and the fingers in spinning, and a 
few sticks, the limb of a tree, a hole in the ground for his treadles 
and feet, constituted his entire loom during twenty centuries. But 
so great was his industry that "in every village, every woman and 
child was at work, making a piece of cloth," says Orme, and the 
muslins of Decca were so finely woven that they were described as 
" webs of woven wind." 

It is disputed whether the manufacture of cotton in Europe 
was brought to Italy during the Crusades, or to Holland by the 
Dutch after the latter had passed to India by the Cape of Good 
Hope. The former is the better view, as Holland imported cottons 
from Italy before her ships rounded the cape. 

The cotton manufacture began at Manchester, England, before 
1640, as an adjunct to the linen manufacture previously carried 
on, but had hardly any growth until 1760 and later. The inven- 
tion of tbe spinning jenny by Hargreaves, in 1770, was the be- 
ginning of the cotton industiy in England. The invention cre- 
ated such alarm among the spinners, whose labor it displaced, 
that they first broke into Hargreave's house and desti'oyed his 
machine, and afterwards, when the jenny had begun to come 
into general use, they had a great uprising of the people, and, 
scouring the country, broke everj^ curling and spinning machine 
they could find in Lancashire. In 1769 to 1772, Arkwright fol- 
lowed with the invention of the spinning frame, Avater frame, or 
" throstle," as it was variously called, which performs the whole 
process of spinning itself, leaving to the Avorkmen only to feed 
it with material and piece the thread when it breaks. In 1785 the 
steam-engine was first applied to drive the machines for spinning 
cotton. At this period the raw material, or as it was for many years 
called the "cotton wool," or more briefij'' the "avooI," came from 

* Encyclopedia Britannica, Art. " Cotton." 



GROWTH OF MANCHESTER. 685 

the British West ludies, Brazil, Smyrna, etc. In the same year, 
1785, a clergyman named Cartwright, who had never seen a per- 
son weave, invented the power loom, being stimulated thereto by 
the suggestion that the spinning machine would soon spin so 
much yarn that hands enough never could be hired to weave it. 
He had seen an automaton machine play chess, and as all the 
movements in weaving were reducible to three, he thought a 
machine could make them. When first broached, the idea was 
combated as visionary, by every person familiar with weaving. 

Until these inventions came into use cotton goods were dearer 
than woolen, and too dear for general use. About 1795 a canal 
brought cheap coal to Manchester. Her small wares were sent 
out on pack-horses, into the villages of England, and sold by 
chapmen, in the inns. The whole cotton trade was still in the 
germ, but from 1795 it gvew rapidly. By 1800 it consumed 100,- 
000 bales and exported $27,000,000 worth of manufactured cot- 
tons. Now 3,000,000 bales are required, and the export of manu- 
factured cottons has grown to $337,500,000. The period of great- 
est rapidity in the growth of the cotton industry was from 1795 
to 1855. In 3817 it employed 110,763 persons in Great Britain. 
In 1835 it employed 220,134 persons, or more than there were in 
1880 employed in the same industry in the United States.* The 
cotton-spinning kingdom had fifty years the start, as a manufac- 
turing power, of the cotton-growing republic, and yet this start 
had all been won in the preceding forty years. 

The rate of growth of the cotton industry in England is almost 
identical with that of the city of Manchester, for about eight- 
ninths of all the people employed in the industry in England 
were employed in, and formed a part of the gi'owth of, the city of 
Manchester, since 1800.t 

The cotton industry in England results in an export four times 
as great as the domestic consumption. In 1876 the annual value 
of the expoi'ts of yarn and cloth were £73,079,000, while the 
home consumption amounted only to £17,777,000. It is this in- 
dustry which more than any other, except banking or the lend- 
ing of money, compels England to pursue an aggressive policy in 
pushing her foreign markets and defending her foreign trade at 
every point. It is this desire to protect and defend her foreign 
trade, that causes the drum-beat of her morning reveille to ac- 

* Robert P. Porter, "Breadwinners Abroad," p. 91. 

t Manchester, including Salford. Porter's " Breadwinners," p. 91. 



686 



ECONOMIC PHILOSOPHY. 



company the sun, without ceasing, in his circuit around the 
world. For behind the British drummer everywhere is the 

















y^ 


'518,000 


500,000 












440,000 


476,000 




400,000 








/ 


400,000 








300,000 






238,000 


300,000 










200,000 


y 


162,000 














^^lOC 


,000 

















GKOWTH OF THE CITY OF MANCHESTER. 

British trader, who employs the drummer, and pays for the beat- 
ing of the drum out of the profit on his exports. 

233. Tlie Cotton-Growing' Industry in the United 
States. — To encourage the production of raw cotton, or as it was 
at first usually called "cotton wool " in the United States, a duty 
of three cents per pound was laid on its importation in 1790, and 
this duty, with slight variations in its amount, continued until 
1846. A doubt was expressed whether such a duty could prove 
advantageous, as the prosj)ect that the cotton plant could succeed 
in thefSouth was deemed precarious. In 1792 Eli Whitney in- 
vented the first machine for ginning or separating the seeds from 
the lint or down. Whitney's " saw gin " consists of a series of 
saws revolving between the intei'stices of an iron bed, upon 
which the cotton is placed so as to be drawn through, whilst the 
seeds are left behind. This invention lessened greatly the cost 
of getting the fiber ready for shipment, and immediately caused 
the cultivation of cotton to become profitable. In 1799 the ex- 
port had risen to 9,000,000 pounds, in 1817 to 95,000,000 pounds, 
and in 1845 to 872,000,000 pounds. The protective duty Avas 
pi'obably not needed after 1798. 



FALL OF PROTECTED COTTOK 



687 



The average price of cotton per pound for the half century 
from 1790 to 1844 was as follows : 



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PRICES OF COTTON FROM 1790 TO 1845 IN CENTS PER POUND. 

A general identity will be observed between the fluctuations in 
prices of cotton here indicated and those of breadstufPs in En- 
gland and America set forth inch. iii.,p. 124. The general decline 
in price of cotton, between 1800 and 1845, results from the increase 
in quantity produced ; this increase was so marked, and its effect 
on the price so evident, as to give rise to the saying that the more 
cotton the planter sent to market the less he got for it, while the 
smaller his crop the greater his retvirns.* 

The high price of cotton between the years 1815 and 1820, cofi- 
curring with a rajjid expansion in the production, caused an 
advance in the price of negro slaves in the United Slates in 1820 
to 1830, so that the rearing and breeding of slaves, and the internal 
trade in slaves between the slave- raising and the cotton-growing 
States, became very profitable. This in turn gave a rapid acces- 
sion of political power to the slaveholding interest, which was 
at the same time the free-trade interest. Hence from 1820 to 

* Dr. H. C Carey, "Social Science," by McKean, p. 263, shows that 

In 1815-16 a crop of 80,000,000 lbs. brought $20,500,000. 

" 1821-22 " 1.34,000,000 lbs. " 21,500,000. 

" 1827-29 " 236,000,000 lbs. " 26,000,000. 

" 18.30-32 " 280,000,000 lbs. " 28,000,000. 

" 1840-42 " 616,000,000 lbs. " 55,000,000. 

" 1843-45 " 719,000,000 lbs. " 51,000,000. 

" 1849 " 1,026,000,000 lbs. " 66,000,000. 

In short, twelve and one-half times as much cotton iu 1849 as was produced in 1815 
brought only three and one-third times as much money. 



688 ECONOMIC PHILOSOPHY. 

1860 cotton growing, slavery, and free trade became closely knit 
together into one principle. This it was which repealed the 
Missouri Compromise in 1820, battled for the equality of slavery 
with the wages system from 1820 to 1860, threatened secession 
and a dissolution of the Union in 1828 to 1830, and after thwart- 
ing the protective policy from 1833 to 1860, except during an 
interval from 1812 to 1816, finally broke out into the civil Avar of 
1860 to 1865. 

The considerations underlying^ the entire struggle were eco- 
nomic. The armies that met on the Rapidan, and at Vicksburg, 
represented opposing economic theories. The constitution of the 
attempted Confederate States solemnly provided that no protec- 
tive tariff should ever be enacted in those States, or by that gov- 
ernment. The Confederacy was only to differ from the Union, in 
making slavery the normal condition of labor, and freedom from 
protective duties the natural right of commerce. 

It is an impressive truth that the free trade, thus contended for, 
destroyed the Confederacy. The lack of the gold revenue, which 
would have come from a protective tariff if the South had had 
competing manufactures, rendered the bonds and notes of the 
Confederate States worthless. The lack of the manufactured 
goods greatly impaired their .military strength. The conviction 
became far more general in the South after the war, that no nation 
can afford to depend upon the production, by another nation, of 
any of the forms of wealth essential to a nation's defense in war. 
The feeling of dependence on cotton, expressed by tlie saying 
'^Cotton is king," gave way to the feeling that money is king. 
The Northern States, by their greater diversification of industries, 
actually grew richer in the midst of the expenditures which so 
impoverished the South. Of this diversity of industries money is 
the symbol and agent. 

234. Cottou as a Power in Politics. — The political effects 
of the rapid expansion of the cotton manufacture in Englaiid, 
from 1800 to 1855, were as important as were those of the equally 
rapid expansion of the cotton culture in the United States. It 
engendered the ambition of England to become the workshop 
of the world and to convert all other nations into consumers 
of her products and producers of her food and raw mate- 
rials. In pursuit of this policy she sacrificed her farmers, and 
yeomani'y of Ireland and Scotland, at the shrine of foreign trade. 
The nature of her success will be seen, by observing how much more 
largely her trade lies with nations which she is able to command 



TEE COTTON FAMINE. 



689 



witli her guns, and whose tariffs she regulates hy treaties obtained 
by aggressive war, or by more or less open purchase, than with 
nations whose power enables them, and whose intelligence in- 
spires them, to admit or exclude her goods at their own pleasure. 
In 1881 British cotton piece goods were shipped to countries 
whose trade is commanded by treaties which are the product of 
former wars, coercion, or purchase, as follows : 



To Coerced and Treaty -bound Countries. 



To Turkey 

To Egypt .... 
To Brazil .... 
To foreign West Indies . 
To China and Hong Kong 
To Java 



$23,468,500 
7 755,935 

14,501,444 
6,154,888 

29,105,947 
5,170,369 



To India, Ceylon.'and Singapore 93,571,981 



$179,735,070 



To Free Countries. 



To France 

To Italy . 

To United States . 

To Arnentiue Rypublic 

To Chili .... 

To British North America 

To Australia . 



To other countries 



$4,97),206 
6,344,745 
7,521,409 
5,804,570 
5,257,542 
4,599,064 
8,187,015 

$41,748,211 

$04,702,159 



Neai'ly five times as much of the foi'eign trade of England in 
cotton piece goods now lies in countries whose legislation she is 
able to shape, and does shape, by coercion or other means, as in 
those which are independent of her control. No other element 
of the English export trade has exercised so aggressive an influence 
• over English j)olitics as this export of cotton goods. To it are 
due the establishment of an empire in India, the repeal of the 
corn laws in 184:6, the British naval and commercial policy, and 
much of British colonial finance. 

235. The Cotton Famine of 1860-5.— Society by an in- 
voluntary economic law, acting only through the impulse of 
dealers towards profits, economizes in the use of any essential of 
life of which the supply is cut off, by means of a rising scale of 
prices. This was shown in the cotton famine, produced hj the 
civil war in the United States, in 1861 to 1865. The year 1860 
had been the year of greatest production ever known in cot- 
ton goods. Two thousand six hundred and fifty mills, em- 
ploying 440,000 hands, were running 30,000,000 spindles and 
350,000 power looms. Of 1,390 million pounds of cotton im- 
ported 1,054 million were worked up in Great Britain. Twenty- 
four million pounds' (sterling) worth annually of cotton goods 
were consumed in Great Britain, and a value twice as large was 
exported. 

In the year 1861 the price of middling Orleans rose from 7:}d. to 



690 ECONOMIC PHILOSOPHY. 

12d. per lb. This shut off the profits of spinning and weaving 
until an unusually large stoclc of goods on hand could be sold 
off, as the manufactured goods did not rise in price as rapidly as 
the raw materials. Moreovei', though the quantity of raw 
cotton in store was greater than ever before, the ratio of its price 
to that of the goods was such that it could not be made up at a 
profit, and hence the mills were rapidly closed or put on short 
time. In 1862 relief funds were subscribed, and soup kitchens 
were opened, furnishing soup at Id. per basin. From half to 
three-fourths of the employees in the different mills were out of 
work. About $1,000,000 was subscribed .to keep the workers 
from starving. In May cotton rose to 15d. , and in October to 
2s. 3d. per lb., and more profit could be made by buying to hold 
than by manufacturing. At Christmas 352,000 persons were out 
of work, and £40,000 per week were distributed in relief. Not 
until May, 1863, did the manufactured goods on hand climb up 
to prices at which the raw cotton could be spun and wove at a 
profit, when it was wortli 2s. 5d. per lb. in the bale. Then the 
manufacture was gradually resumed. The following schedule, 
of the prices obtained for the quantity of raw cotton imported, 
shows that, the smaller the quantity obtainable in any except one 
year, the larger was the sum of money which measured its aggre- 
gate value : 

Year. Quantities (cwts ) Value. 

1800 12,410,000 £35 757,000 

1861 . 11,233,000 38,653,000 

1862 4,678,000 31,093,000 

1863 5,978,<00 !5G,278,000 

1864 7,976,000 78,201,000 

1865 8,732,000 66,032,000 

1866 12,296,000 77,521,000 

The high price of cotton was divided by being spread in part 
over silks, woolens, linen, hemp, and even jute, straw, paper, 
etc., all of which were called on, in part, as substitutes. The rise 
which remained was sufficient to withhold it entirely from use, 
until the stocks previously manufactured had been worn out, 
thus dividing the rise in price over the largest quantity of goods 
and the longest possible period of time. In this way the hard- 
ships of the famine, though severe, were minimized to the utmost 
extent possible, until the supply returned. The cold operation of 
speculative selfishness thus had the effect to save the cotton on 
hand and prevent its waste. This form of economy, was therefore, 
as benevolent in its effects as the feeding of the hungry with 



QtflNlNE-MAKINO EXPELLED. 691 

cheap soup. Students of political economy, in accounting for the 
prices of textile fabrics in Euro^je or America from 1861 to 1870, 
will be careful to unite with such other causes as they may have 
in view, the all-controlling influence of the cotton famine, and 
the large issues of x^aper money in the United States, and of debt 
in Europe. 

The imports of cotton goods into the United States, in certain 
lines, are more than three times as great in value as the exports 
of cotton goods in other lines. The former are $36,000,000, and 
the latter $13,000,000 annually. Our imports are most largely of 
hosiery, and our exports most largely of sheetings and prints. 
The cotton manufacturers of New England were among the ag- 
gressive advocates of the pi'otective policy in the eai-ly days of 
the republic, or from 1790 to 1850. For thirty years past, how- 
ever, the classes of cotton manufacture which were able to live, 
were also able to export in free competition with English manu- 
facturers. While steadily urging the necessity of securing the 
home market to American producers, they have not sought ac- 
tively to supersede the importation in those lines in w^iich the 
former held the field. 

The success of foreign hosiery, and certain other forms of cotton 
manufacture, in keeping their hold on the American market is due 
to the admission of them at low and encouraging rates of duty, 
which have repressed the effort to substitute the American for the 
foreign article in those lines. 

236. Destruction of Quinine Manufactui-e in the 
United States. — To descend from the great cotton industry to 
the little manufacture of quinine out of cinchona bark, is like a 
step from the infinitely great to the infinitely little. Quinine, 
however, possesses economic importance as the one and only 
article which, as a sop to an agitation extending over twenty-five 
years, in behalf of " tariff reform," was, in 1879, taken out from 
under a duty which had the effect to protect the manufacture in 
the United States, and was placed upon the free list. There were, 
at the time of the repeal of the duty, five American firms, and 
thirteen European firms, engaged in the manufacture. It had 
first been ]Dlaced under a duty of fifteen per cent, during the pres- 
idency of Jackson, in 1832, which had been raised to forty cents 
per ounce in 1842, restoi'ed to twenty per cent, in 1846, changed to 
fifteen per cent, in 1857, to twenty per cent, in 1861, to forty-five 
per cent, in 1862, to twenty per cent, in 1872, whei'e it continued 
until made free. 



692 ECONOMIC PHILOSOPHY. 

The article is made from a bark obtained chiefly in Peru, and 
which European as well as American manufacturers import free. 
The rate of production is very variable, and hence the price of 
quinine varies chiefly according- to the price of the bark. Under 
the various duties above named, the following was the range of 
prices for twenty -five years : 

In 1857 it sold as high as $2.00 and as low as $1 .40 per oz. 

In 18G0 " as high as $1.80, and as low as f 1.20. 

In 18G3 " as high as $3.90, and as low as $2.25. 

In 1864 " as high as $3.75, and as low as $2.G0. 

In 1865 " as liigh as $3.40, and as low as $2.20. 

In 1877 " as high as $4.50, and as low as $2.70. 

lu 1881 '■ as high as $3.25, and as low as $1.90. 

In short, in each year it varied in price, by an amount several 
times greater than the duty, which variation, therefore, could 
not have been an effect of the duty. In 1877, when the special 
agitation was raised against the duty as a "tax on invalids," the 
quinine was selling for $4. 12i per ounce in London, which was 
$2.59 higher than it had sold for* in London one year previously. 
On this cry the duty was repealed. Four years after its repeal 
quinine sold as higli as $3.25 and as low as $1.90, Avhich was 
seventy cents higher than it had sold for when under a duty in 
1860. 

The price on both sides of the ocean rose and fell chiefly with 
the price of the bark. The effect of the withdrawal of the duty 
was that the American manufacturers, who had imported 6,389,- 
378 pounds of bark for manufacture in 1878, imported only 3,639,- 
315 pounds in 1883, and afterward a continually diminishing 
quantity. Meanwhile our importation of the sulphate of quinine 
rose at the following rates, our American invalids being each 
year more dependent on the imported article : 

In 1877 we imported 75,804 ounces. 

In 1878 " " 17,549 

In 1879 " " 228,348 

In 1880 " " 416,998 

In 1881 " " 408,351 

In 1882 " " 794,495 

In 1883 " " 1,055,764 

In short the rejjeal of the duty, exactly as in the case of the 
repeal of the English duties on breadstufts, while it makes no 
permanent change in the price of the breadstuffs, operates effect- 
ually to transfer the seat of production from the home countiy 
to the foreign. 



AMERICAN SALT. 



693 



237. Tlie Salt Industry as Related to the Tariff— The 

manufacture of salt in the United States depends largely on pro- 
tective legislation by. Congress, and by the several States for its 
existence ; yet its history is full of proofs that thus to pi'otect the 
domestic manufacture cheapens the supply, and that a repeal of 
the duties only raises the price of salt abroad instead of reducing 
it at home. E\^ery State in the Union, and probably every 
country on the globe, contains the means of making salt. In 
1880, out of a total consumption of 52^ pounds per capita for the 
American people, 19 pounds were foreign salt imported, Z2>\ 
pounds were domestic, of which 9.7 pounds were produced in 
New York, 3.46 pounds in Virginia, 2.95 pounds in Ohio, 13.87 
pounds in Michigan, and 3.20 pounds in all other parts of the 
United States. The following diagrams exhibit the expansion in 
the production relatively to the importation in forty years. 



SUPPLY PER CAPITA IN 1880. 



SUPPLY PKR CAPITA IN 1840. 




In the fifty years ending in 1880, the supply of domestic salt 
increased by 14.1 pounds per capita, the supply of foreign salt 
diminished 3.8 pounds j)er capita, and the total supply of salt in- 
creased by 10.25 pounds per capita. The jjrice of domestic salt 
during this period declined in about the ratio of its increased 
abundance per ca^iita, viz., from 21 cents per bushel to 164 cents, 
while the average foreign invoice value per bushel declined only 
from 12| cents per bushel in 1830, to lOf cents per bushel in 
1880. So much foi'eign salt can be brought in ballast, free of 
freight, to the United States, that ocean transportation adds little 
or notliing to the cost of foreigii salt. 



694 ECONOMIC PHILOSOPHY. 

On March 3, 1807, a duty of twenty cents per bushel which had 
existed since 1800 was repealed. The country enjoyed the benefits 
of free salt, at $2 per bushel ! * In 1809, and later, after the war of 
1812-15 set in, it rose to $4 i^er bushel. During neither of these 
periods would the cost of pi'oduction have exceeded thii*ty-five 
cents per bushel, if the interval of free trade in salt had not de- 
stroyed the domestic establishments. Tlie cost of salt, for the 
three years of war, was thus made equivalent to what an equal 
supply for thii'ty -three years would have cost, had proper estab- 
lishments for making- salt been maintained. t 

In Texas and Louisiana are some of the finest beds of mineral 
salt in the United States, wherein salt caii be obtained with fewer 
hours of labor per bushel than at any of the foreign salt produc- 
ing points, but not at so low a money price. The South, being 
always most dependent on the foreign supply for salt, expected 
to get cheap salt through a secession from the Union in 1860, as 
one of the economic advantages of that undertaking. 

Practically, however, the war of 1861 to 1865, and the block- 
ade of the Confederate ports, gave the Southern States so vigor- 
ous a protective policy that the salt manufactui^e at the Grand 
Saline in Texas alone soon employed 3,000 men. As in 1807 to 
1815, so again in the Southern States in 1861-5, the cost of four 
years of salt certainly exceeded any sum that thirty years of salt 
supply could have cost, under a diversification of industries 
arrived at, dui'ing peace, by tariff duties. Indeed, tlie inability of 
the Southern States to supply themselves promptly with salt, 
quinine, iron and steel ware, and clothing, were among the chief 
material causes of their overthrow in the military struggle. 

Protection to the salt manufacture, by tariff duties, has been 
offset by State taxes on the product, in a degree that is not usually 
allowed for. Thus, from 1813 to 1830, though the duty was 
twenty cents j)er bushel, the State of New York, where alone the 
manufacture had got a start, levied a tax of twelve and one-half 
cents per bushel, thus reducing the protection to seven and one- 
half cents. In 1830 the duty was reduced to fifteen cents per 
bushel, leaving a protection of only two and one-half cents, and 
from 1832 to 1834 the State tax was two and one-half cents higher 
than the duty, thus virtually fining the domestic producers two 

* Bishop's " History of American Manufacturee." 

t Report of Committee on Salt to Niitional Convention for Protection of American 
Interests, held at New York, April 5, 1811. 



THE MICHIGAN COMPETITION. 695 

and one-half cents per bushel, relatively to their foreign competi- 
tors, for doing- business in New York, instead of abroad. In 1834, 
the duty having fallen to 9.4 cents per bushel, the State tax was re- 
duced to six cents, and in 1841, under the further decline of the 
duty, the protection was only 1.6 cent per bushel. 

The highly protective tariff o'f 1842 laid a duty of eight cents 
per bushel, which in 1846 was reduced to twenty per cent., equal 
to 2.43 cents per bushel, and the state reduced its tax to one cent 
per bushel, where it still remains. Hence, for ten years ending 
in 1857, the protection to the New York salt-makex's was only 1.43 
cents j)er bushel, and under the reduction in 1857 the protection 
fell to three-fifths of a cent per bushel. In 1861-2 the duties 
were raised to from ten to thirteen cents per bushel. In 1872 
these rates were reduced to from 4^ to 6f cents per bushel. 

Meanwhile the legislature of Michigan, in 1859, offered a bounty 
of ten cents per bushel, for all salt over the first 5,000 bushels 
produced from water obtained by boring wells in Michigan. 
Though the tariff protection was then only If cent per 
bushel, capital rushed into the manufacture at a rate that soon 
compelled the State to repeal the tax. The production, beginning 
in 1860 with 2,360 bushels, rose in 1881 to 13,751,495 bushels, 
which about equalled the entire consumption of foreign salt in 
either 1860 or 1880. The only special advantages enjoyed by 
Michigan over many of the other States lay in the temporary 
offer of the bounty, and the cheap supply of sawdust, fuel, 
and lumber for barrelling, furnished by the vast lumber manu- 
facture in conjunction with which the salt manufacture is car- 
ried on. 

In the competition thus set on foot between the Michigan salt 
producers and the importers of foreign salt, the Michigan salt has 
steadily declined from a price equal to the invoice price of the 
foreign salt, jdIus the duty, down to a price actually lower in some 
years than the invoice (foreign) price of the imported salt free of 
duty. The diagram shows the prices. 

Here it is evident that the Michigan prices for the five years, 
1877 to 1881 inclusive, ai-e on a level with the foreign invoice 
prices without duty from 1868 to 1872, and are from twenty to 
twenty-four cents per barrel lower than the foreign invoice price 
from 1872 to 1876 inclusive. But the striking fact shown by this 
diagram is that the reduction of from four to six cents per bushel 
(sixteen to twenty-four cents per barrel), made in our import 
duty in 1872, sent the foreign invoice price of salt up by from 



696 



ECONOMIC PHILOSOPHY. 



twenty to twenty-four cents per barrel, or by exactly the duty.* 



Average Price per 
Barrel in cents. 




If there were any class of cases in which Mr. Mill's theory 
would apply, that protective duties on imports would make them- 
selves felt in the increased prices of exports, and would there- 
fore, operate in part to tax foreigners on our exports, and in part 
to lessen our exports, such an effect might be expected in the 
case of the import duty on salt acting on our export of but- 
ter. Under the tariff of 1851, with a duty of only 1.5 cent 
per bushel on salt, the country exported less butter in five 
years, than when the duty in 1862 was made twenty-four cents 
per 100 pounds it exported in one year, viz., the year 1863. In 
fifteen years, from 1846 to 1862, of virtual free trade in salt, the 



* David H. Mason, of Chicago, a most accurate economic expert, says ("Report of 
TarifE Commission," p. 1205) : 

" Tlie reduced duty went into operation August 1, 1873. Let it be noticed that the 
foreign producers, vvlio always take whatever profit circumstances will permit them to 



LEATHEB AND SHOES. 697 

country exported only 66,118,096 pounds of butter, while in the 
ten years following, under a duty of twenty-four cents per 100 
pounds, the export of butter rose to 104,031,946 pounds, being 
more than twice as large an export of butter when the duty on 
salt was twelve-fold higher than under free trade. 

If the import duty on salt is jjowerless to prevent the doubling 
the export of butter from whatever cause, it may safely be affirmed 
that the notion that duties on imports are a check on exports is 
the dream of a visionary. 

238. Licatlier, Boot.s, and Slices. — The United States 
surpasses every other country in the abundance per capita, 
average quality, and cheapness of its supplies of leather, boots, 
and shoes. Lynn began to export women's shoes in 1788. In 
1795 she supplied the Southern markets, and sent some to 
Europe, and in 1874 the product of the Lynn factoi'ies alone was 
$14,000,000, and the three States of Massachusetts, Maine, and 
New Hampshire now make upwards of $100,000,000 worth per 
annum in factories, while the total factory product of the United 
States in 1880 was 1166,050,354. The product of the petty in- 
dividual shoemakers, and makers to order, admits of no accurate 
statement, and hence we are without any data of the aggregate 
quantity consumed. 

The United States has three aiid a half times as many cattle 
per capita of population as Great Britain, about as many sheep; * 
and imports free of duty almost exactly the same annual supply of 

get, /)?<< MP ^A.e«»'^;ricesim??ie(iia<e/?/ after the passage of the bill, in June, 1872, reduc- 
ing the dutiP3 on salt, the invoice price, even in July, 1873, under the old duty, being 
advanced ov ax one and one-quarter cents per 100 pounds ; in fiscal year 1873, very 
nearly six and one-half cents above what it was in fiscal year 1872 ; in fiscal year 1874, 
about ten cents ; in fiscal year 1875, over seven cents ; and in fiscal year 1876, over four 
and one-quarter cents. In forty-seven months after the reduction of the duty took 
effect, the average increase in the foreign invoice value amounted to 8 .343 cents per 
100 pounds, or to more than two-thirds of the duty taken off. Practically considered, 
therefore, the reduction of duty deprived the government during that period of $1,611,- 
336.09 of revenue, and legislated $1,120,281.69 of that sum into the pockets of the 
foreign manufacturers of salt, to whom the legi.«lation by Congress was an enabling 
act to that extent by the enlargement of compeMtive powers which it conferred upon 
our alien rivals. Comparing the whole period ending in 1881 with the one ending with 
July, 1872, it appears that the foreigners increased their invoice prices an average of 
3.895 cents per 100 pounds, or by neorly one-fourth of the duty taken off, so that, in 
the aggregate, the government lost $3,891,113.88 of revenue from salt in packages alone, 
and the foreign salt-makers pocketed the sum of $1,202,990.91 ; consequently, thelegis- 
ation in 1872, advocated and framed in the interests of cheap salt, was virtually a move- 
ment to enable the fon-ign manufacturers to charge more for their salt, at the expense 
of the national revenue, of the American consumer, and of our domestic producers." 
* As many per capita, viz., 31,000,000. 



698 ECONOMIC PHILOSOPHY. 

hides, so that our aggregate soui'ces of leather supply must be 
fully twice as abundant as those of Gi'eat Britain. The ship- 
ments of shoes from Boston alone, to points outside of New Eng- 
land, in 1873, were 55,000,000 pairs, for which the i^eturus were 
$61,875,000, being $1.12 per pair, while the shipments from the 
whole of Great Britain to all parts of the world were in tlae same 
year only 6,332,328 pairs, of which the returns were $8,197,852.80, 
showing an average selling price of $1.28 per pair. This shows 
that the current producers' prices were lower in New England 
than in Great Britain, which is in accordance with the standing 
law that prices will always be lower where the largest supplies 
are produced. 

England imported in 1875 109,906 dozen pairs of boots and 
shoes, and exported 462,104 dozen pairs, leaving a net export 
of 353,198 dozen pairs, or 4,226,376 pairs, which is about one- 
twentieth the trade in shoes which would figure as exports if 
New England were an independent nation. 

The United States export boots and shoes to thirty-eight for- 
eign countries, of which the British West Indies and Mexico are 
our largest customers, and exports sole, uj)per, and other leather to 
forty foreign countries, England buying 27,284,716 pounds, worth 
$5,529,600. We also ship morocco and other fine leather to 
thirty foreign countries. England I'eceiving six-sevenths of our 
sliipments. Side by side with these exports we also import 
neai'ly as large a quantity of leather for various purposes as we 
export, notwithstanding an import duty of 15 per' cent, on 
leather and 30 per cent, on its manufactures. 

A repeal of these protective duties would substitute foreign 
for American leathers and boots and shoes first in the Southern 
and Pacific States, and would cause a temporary panic in prices, 
notwithstanding the average prices in the United States, both on 
leather and most of its products, are lower than they ax'e abroad. 

In spite of these facts, the Wilmington (N. C.) Morning Star 
lately said : 

" A pair of shoes that can be bought in England, and made of better material at that, 
for $2, will cost nearly double in the United States. Every time a father shoes his wife 
and children he is paying a tax to New England manufacturers of from 50 to 100 per 
cent." 

North Carolina has but five shoe factories, which turn out a 
product of only $107,000 per year. Her people have all the 
natural facilities, and have had all the time in which to acquire 
the ai'tificial facilities, that those of New England have had. 
Within the experience of persons now living, it was the common 



CREED OF THE THRIFTLESS. 699 

custom of persons residing in the mountain sections of North 
Carolina and East Tennessee, to carry shoes to cliurch on Sunday 
in their hands to the church door, put them on merely to wear 
while inside the church, and on their exit remove them again at 
the church door and walk barefoot the rest of the week. It is 
lack of enterprise which induces a people to oppose the introduc- 
tion of the manufacture of shoes into a countiy, upon whose 
hills millions of cattle might freely grow the hides, lest some 
one else will make a profit out of their manufacture, which they 
might make if they would, but are too lazy and thriftless to 
make. It is unpatriotic spleen to complain of the jDriority in 
enterprise of those who will make shoes, as being a mode of op- 
pression and rapine pi*acticed upon those who will almost forego 
their use rather than make them. This compound of unthrift 
and spleen are the natural soil in wliich, at least in America, 
the seeds of "free trade " germinate with fecundity and grow 
with power. 

A man who practices thrift himself, in his personal affairs, will 
readily submit to the tax, if tax it require, which is necessary to 
give him thrifty social surroundings of every kind, and especially 
a thrifty school, a thrifty town, county, state, and nation. But 
thriftlessness shirks production, and holds aloof from every form 
of enterprise and labor, until its means of subsistence are lowered 
to a standard bordering on barbarism, and its forms of obtaining 
the services of others verge toward either swindling, vice, or 
slavery. It then finds it much easier to see why it should con- 
tribute nothing to the welfare of others, since it has fallen into 
the ways and habits which contribute nothing to its own welfare. 

Hence it is that in the United States the thriftless " ne'er-do- 
well " class, and the class who really believe that to love one's 
country is a pretence which stamps a man as presumptively in- 
sincere, form the basis of impulse and type of charcter which 
avows the free-trade passion. 

Protection to native industry strikes down into the depths of 
the human heart through two leading sentiments or tap-roots, 
one of wliich is the pei'ception that it is in an economic sense 
profitable to the aggregated mass of the people, but the other of 
which must always be that public spirit whiclr feels that the most 
active employment and highest utilization of man is, necessarily 
and without computation, profitable. If free trade gives us our 
choice of three arts, protection gives us a like choice of thirty. 
"Vyjien publiQ spirit wanes, protection goes to tl^e wall, but not bg- 



700 ECONOMIC PHIL OSOPET. 

cause it is not economically profitable to the citizen who opposes 
it as well as to all others. Its opposition comes from those whose 
passion it is to sacrifice ultimate welfare to temporary. Hence 
a sufficient ground-swell of misrepresentation can now and then 
be manufactured to secure a transfer of poAver from the provident 
and enlightened to the thriftless and unwar3^ 

Society has its periods when it grows tired of being wise, tired 
of being just, intelligent and humane, and prefers to be erratic, 
spasmodic, and foolish. When these freaks come, it delights in 
having a grand All-Fools' Day. It honors folly as something 
generous and democratic. It abuses j)rudence as the virtue of the 
parsimonious, and actually succeeds in making inertia appear 
profound and vacancy and stupidity inspired. When the carni- 
val is over and society resumes its judgment, there will always 
be those wlio will contend that things are better for the relaxa- 
tion. They will call the pressure of their own noses- against the 
revolving grindstone a getting down to hai'd-pan, or, perhaps, 
a. destruction of monopolists. It is due to this relapse toward a 
rest from being wise, rather tlian to any weight or dignity that has 
attached to free-trade arguments, that the American Congress or 
politicians have, at periodical intervals, solemnly enacted that 
the prosperity which had been enjoyed in protective i^eriods 
should be razeed, and that wc should all, like Nebuchadnezzar, cut 
grass for a while. So long as this passion, of the shiftless and un^ 
thftifty man for change, is a joredominant element in his basic 
nature, there is at no time any assurance that a partially free- 
trade policy may not be adopted temporarily, at any moment, in a 
period of prolonged peace and prosperity. 

239. Industries Must be Uiiprolitable, as well as De- 
sirable, to Merit State Action. — The political pi'inciple under- 
ly ing i^rotection to any industry w h ich is temporarily unprofi table, 
but permanently desirable, applies with expanding and increas- 
ing force as the prospect that the industry will ever be profitable 
diminishes, provided the conviction that it is desirable and essen- 
tial to the general Avelfare, irrespective of the ju-ofitableness to 
those who carry it on, is sure and general. It is on tliis ground 
that the state, in different countries, becomes the active pro- 
moter of education, religion, charity, amusements, internal ina- 
provements such as roads, lights, sewers, docks, wharves, paved 
streets, public libraries, jiarks, pubUc games, the destruction of 
dangerous or offensive animals, quarantine regulations, light 
houses, the care and removal of dead animals, garbage and filth. 



OPPOSITE KINDS OF " PROFIT." VOl 

vacciaatioii, tlie planting' of trees, and scores of other details. 
Each of these represents an industry in the cai'rying on of which 
tliere would be some slight return, apart from any aid thereto by 
the state, but the i*etura would be insufflcient to secure its activ- 
ity in the degree required for the general good. Teachers can 
always find a few pupils if they teacli for fees paid by parents. 
Until the present century, and outside of the United States and 
Germany, these were almost the only schools. But owing to 
the unprofitableness of the industry when left thus unaided, cer- 
tain states deem it better to make the education of youth a func- 
tion of the state. So it is an unprofitable industry to detect and 
l^unish crime, in the sense that the private fees obtainable for the 
work would never secure its adequate i^erformance. It is be- 
cause the work of administering justice to crimiiaals is both nec- 
essary to the common weal, and yet productive of no profitable 
return in the economic sense, that the state deems it necessary to 
make the administration of justice one of its functions. In some 
states and natioiis the administration of religion is a state func- 
tion, in others it is sustained by individual gifts and fees. But 
in all except a few very large church congregations sustained by 
preacliers»of special eloquence, it is, in the economic sense, an 
unprofitable industry, requiring to be sustained by either volun- 
tary or involuntary taxation. 

In tliis point of view, the state may be economically defined as 
being the aggregate of all the perpetually unprofitable industries 
which, for public and prudential reasons, it is expedient that soci- 
ety should be taxed to protect. If the adjustment or trial of 
private disputes and the punishment of crime could in any man- 
ner be made so intrinsically profitable as a business, without 
state aid, as to be efficiently carried on by x^i'ivate persons for 
profit, court-houses and jails, built at pubMc cost, would soon 
cease to exist, and judges and courts, maintained at public ex- 
pense, would disappear. The usual unprofitableness of the busi- 
ness is as essential as its intrinsic desirableness to the governing 
majorities or deciding classes of persons in the state, to insure the 
making it a state function. Hence, industries, however desira- 
ble, which are also usually profitable, are never, where profitable, 
made a state function, unless it be that they ai-e less profitable 
than the state feels they should be. The jDarticular industries 
which a state will aid, or exalt into a state function are as varied 
as the genius, or whims, of unlike races. In one it may be pre- 
dicting the weather ; in another, watching eclipses. 



702 ECONOMIC PHILOSOPHY. 



CLOSING WOEDS. 



240. Private and Public Purposes. — The habit of regard- 
ing certain objects or functions of the state as public, and others 
as relating only to private, interest is so strong in many minds, 
that they suppose it to be innate and self-evident that to tax a 
citizen to maintain a court-house is to tax him for a public pur- 
pose, but to tax him to maintain a factory is to tax him for a 
private purpose. Very likely such will say that in one case the 
money goes to the state, in the other it is paid over to a j)rivate 
individual. 

The money raised by the state to build court-houses, maintain 
judges and sheriffs, and sustain the ordinary administration of 
justice, is paid in salaries to the judges and sheriffs, to be ex- 
pended by them in the support of their families and the gratifi- 
cation of their individual wants. It is earned by them in the 
performance of their official duties, but it is paid to them as indi- 
viduals, simply because the functions they perform are not self- 
supporting — in short, are unprofitable industries in the economic 
sense (but are held to be socially desirable), and are therefore 
paid for. Hence, when the state takes money from the tax-payer 
A to pay to the judge, sheriff, or school-teacher B, it is taxing 
A to sustain B in an industry economically unprofitable, but 
socially desirable. What is a public purpose and Avhat a private 
purpose varies with the social evolution of a state or tribe. In 
all the Catholic countries of Europe, whei^ein state and church 
are united, religion is a public purpose, and the education of 
youth a private purpose. In the United States education is a 
public purpose, and religion is chiefly a private purpose. A few 
centuries ago the right to punish murder was a private right, 
which belonged first to the deceased's relatives. Only wlien they 
waived their private right did the punishment of murder become 
a public pui'pose. In China the planting of trees, and protection 
of the people from river floods, is a public and imperial purpose. 
In the United States it is a private purpose. In Gi-eece the 
Olympian, Isthmian, and Nemean games were a public purpose 
of the highest state importance. In America all anmsements are 
a pi'ivate purpose. In the middle ages the relief of the poor Avas 
a private purpose, except so far as the church was part of the 
state. In America poor relief is a public purpose in some states, 
and a private one in others, but is jiowhere a function of flie 
pentml government, 



AFTER, TIIEREFOliB! FOR THIS CAUSE. 703 

It is conceivable that, in the infancy of society, hunting and 
fishing, and even the cultivation of the soil, if carried on by the 
commune or tribe, would be a public purpose. Certainly, in 
many of the more savage African tribes visited by Stanley in his 
first voyage down the Congo, and wherein no trade could be 
done except with the chief as representative of the ti'ibe, trading 
and receiving presents were public purposes. But in civilized 
states both receiving presents and trading have ceased to be pub- 
lic purposes. 

What is a public purpose and what a private varies, therefore, 
more or less, as between any two states and stages of develop- 
ment. But in all, the public purpose is that which the majority 
of numbers, wealth and force in society, decide shall be done by 
the state, and the private pux'pose covers all matters of choice, in 
which the individual is left untrammeled by the state. In a 
military age, when fighting was the chief occupation of the 
ruling classes, all taxation to maintain soldiers was a public pur- 
pose. But taxation to maintain a teacher would have been 
deemed very clearly for a private purpose. It is possible that as 
we advance industrially the military function may come to be 
performed wholly for hire, as the educational one comes to be 
absorbed by the state. Certainly, with each step in a nation's 
advance from the military towai'd the industrial state, it gives 
less attention to its ai'niies and more to its industries. 

24:1. Post Hoc, Ergo Propter Hoc. — The class of econo- 
mists who prefer the crude simplicities of dogmatic assumption 
to the often complex methods of historic proof are wont to meet 
all economic argument, based on a grouping together of economic 
causes and their consequences, by the apt j)hrase, ' ' Post hoc, ergo 
propter hocy The use of this phrase by free traders as a means 
of thwarting an argument for protection, founded on a coupling 
of protective policies with national prosperity, is constant, and 
seems to be regarded as eflicient. In fact, as effects cannot well 
precede their causes, all argument from causes to effect, and, 
indeed, all logic and philosophy, are open to be met by this 
phrase with equal effect. At a given period after the moon is 
either in the zenith or the nadir of a given point on the earth's 
surface, the tides rise in the ocean at that point. Can the moon's 
influence over the tides be negatived by the simple sneer, ^^ Post 
hoc, ergo propter hoc " ? So of all other causes in science. The 
propter follows the 'post. An accurate statement of the nature 
of the historic method would be that ' ' one adequate or conducing 



704 JiJCONOMlG PBtLOSOPllY. 

cause having arisen immediately prior to the event, and no other 
adequate or conducing- cause being shown, the event will be 
inferred to be due to the adequate or conducing causes actually 
shown to have preceded it, in preference to any assumptions of 
causes which are not shown to have existed, or which, if they 
existed, were not adequate, or, if existing and adequate, did not 
in fact conduce to the event, owing to the interception of their 
operation by other known events. " 

In the presence of adequate producing causes, no others being 
shown, the maxim, '^ Post hoc, ergo propter lioc,^'' becomes the 
very form and substance of logic instead of a fallacy. Hence, in 
economic argument, the maxim does not of itself disclose or im- 
ply a fallacy in the argument, but presents only a buttress behind 
which the opposing advocate may plant himself while he presents 
the other adequate and conducing causes to whose operation he 
himself attributes the event. As a cover for such opposing state- 
ments it is valid. As an independent and self-sustaining objection, 
or as a substitute for the very proof it may properly introduce, it 
is entirely void. 

The reader should also be admonished against the sophistry of 
assuming that simplicity and even beauty in the statement of a 
policy are to be mistaken for simplicity and beauty in its opera- 
tion. A policy which may be extremely simple in its statement 
may be infinitely complex and painful in its operation. On the 
conti'ary, a policy which may be as full of entanglements in its 
statements, as a fort is of buttresses and ramparts, ma}' be as de- 
lightfully direct and simple in its operation, as that fort is on an 
invading foe. Herod's decree, "Kill all the babes under two 
years of age"; Solomon's decree, " Divide the babe equally be- 
tween the two women who claim to be its mother " ; the Rus- 
sian Czar's decree, "Build the railway from St. Petersburg to 
Moscow in the straight line between those cities as I now di'aw 
my pencil " ; and the Compromise Tariff decree of 1833 in the 
United States, " Reduce the tariff 10 per cent, each alternate 
year until it stands at 20 per cent, all round," were models of 
simplicity in their statement, but of complicated barbarity and 
multifarious torture in their operation. 

But time would not avail to caution the student against the 
multifarious forms which fallacy may assume. Fallacy, like 
fraud, defies accurate definition in advance by wearing a new 
coat every time it appears. Hence it is that economic works, 
however ample, truthful, and explicit may be their contents — 



BOOKS CA2s NOT JLVKh: KGONO. MISTS. 705 

and very few of them are either ample, truthful, or explicit — 
can never brace the student certainly and finally against error. 
They are useful in cultivating' the habit of detecting- error, but 
in their use there must arise the new men who are wiser than 
the old books, and who are as tlie new wine that can not be held 
in the old bottles. Such men will see in each exigency, as it shall 
arise, the facts which distinguish it from all preceding cases, and 
will detect in" advance that right way which books can only 
point out after it has been trod. These pioneers in industry and 
in legislation are the actual economists, who stand in a like re- 
lation to the science, as the great lawyers do to the law. The}?" 
absorb its past learning, but they mold its future quality. So, 
after economists have written, and all that books can teach has 
been said, it remains that political economy, or the science of 
man in society, is a part of the process of the continual radiation 
of new truth by new minds. It comes by perpetually renewed 
inspiration. As held by the best instructed minds, it will not be 
identical with the instruction they received. Its latest life will 
always have found its suggestion, but never its exact form, in 
books. It cannot cease to be a process of emanation or of 
evolution. To this extent, as Dr. Henry C. Carey was wont to 
say, political economists can make books, but books can never 
make political economists. It must be in the man. So must all 
art, power, inspiration, and success. But not in one man ab- 
solutely. All men know more than one man. The highest 
school of economic thought must always be the aggregated con- 
sensus of opinion of the world's best business men, producers, 
workers, whom, as forces, the statesmen and instructed thinkers 
marshall and generalize. The writer has tried to bring this book 
abreast of the moving host, to tune it to the living pulses of the 
active world. If he has succeeded, he has caught the impress of 
the marching host, their flying banners, and their fervid cause, 
for a moment. That moment past, the economists of the future 
in their march sweep by, and again raise life above the book. 
These real economists include those who conduct the world's 
industries and legislation, rather than those who instruct in 
this particular art. The claim to be endowed with the gift of 
prophecy as to future economic developments, often springs from 
being out of sorts with existing economic conditions. Those who 
adapt themselves, with most facility and tact, to the demands of 
their environment, can usiially see as far, or farther, ahead than 
the unsuccessful. Economic philosophy is yet in its nascent and 



706 ECONOMIC PSILOSOPBT. 

plastic state. It is born, but it is only beginning to grow. The 
science will proceed according to its inward law, and will have 
its own mode of growth. It will be a factor in the world's pro- 
gress as momentous as could be wished. But it must bide its 
time. Its period of ascendency over mankind will not be that 
of its first youthful impulse, but of its sober second thought. 
At present the honest study of society, in its economic aspects, 
will tend to impart to its students a tone which may be defined 
thus : In observation, industry; in generalization, modesty; in 
criticism, equity; in nationalism, harmony; in internationalism^ 
purity ; in cosmopolitanism, sincerity. By these signs ye shall 
know the true economists. 



THE END. 



GENERAL INDEX. 



A. 

Absentee expenditure, 465, 466, 
487 

Abstinence, relation of to wealth, 
74, 310, 217, 307 

Abundance and scarcity, Bastiat's 
sophism on, 508; protection to 
home industr}' makes more 
abundance than free trade, unless 
the article is one of which we 
can permanently import our 
whole supply, 510; effect of 
abimdance of cotton on values, 
687 

Account, money of, 335, 348, 349 

Accumulation, its social utility, 
220, 222, 304-307; involves as- 
sorting men according to their 
productive capacity, 309; large 
fortunes the measure of a high 
social demand for some special 
change of business energy from 
outworn channels, 397 

Acreage, statistics of acreage 
planted, when first kept in Eng- 
land, 119; of large proprietors 
in America and Europe, 269, 
270; in England, 272-275; of 
forests, 148; of great land grants, 
157-159; of bonanza farms, 269; 
of cultivation in Ireland, 274; 
of cultivation in India, 486; of 
land in India, 488; of cultivated 
lands in England and Wales, 
545, 546; in China, 547; decHne 
of acreage to wheat, etc., on re- 
peal of protective duties, 559 

Adage, ridiculing facts, 24 

Adulteration of highly - taxed 
■wines, 475 

Ad valorem duties, tariff of 1828, 



383; defined, 481; few in Ger- 
man tariff, 517 

Advice from John Bright on the 
American tariff, 608 

Adzes, American, superseding Eng- 
lish in 1868, 596 

Africa, population of, descent in 
America, 33; markets in, 99; 
manufacture of iron in Central, 
644 

Age, relation of to crime, 443; pre- 
histoi'ic ages, iron and steel in, 
645 

Agrarian laws, 138 

Agriculture, wages in go far to- 
ward fixing wages in manufac- 
tures, 181; rate of profit in, 177, 
178, 192; product of, in various 
countries, 230; how affected by 
situation and fertility, 238-255; 
number engaged in, in United 
States, 320; may employ too 
many, 382; functions of the state 
concerning, 433, 434; decline of 
modes of tillage in Ireland 
through loss of home market, 
491; potato rot in Ireland caused 
by decline, 491; agricultural 
class large in France, 496; gov- 
ernment aid to growth of beet 
sugar, 504; improvement of, in 
Prussia, 520; women, number of 
working at, in Germany, 525; in 
Wurtemberg, 525; communal 
system of, in Russia, 526; reno- 
vation of, in China, liow to be 
effected, 551-555; decline of 
acreage planted to wheat in 
Great Britain on withdra\\al of 
protective duties, 559; tlie small 
proportion of agi'icultural pro- 
ducts which will bear export 



^08 



GENERAL INDEX. 



makes home trade essential to 
abundant agricultural produc- 
tion, 602 

Agricultural colleges, bountied in 
United States, 145 

Agricultural implements, duty on, 
and export of, 610 

Alcoholic beverages, taxes on, 475; 
English protection to manufac- 
ture of, 482; against Irish, under 
act of Union, 493; in France 
(wines), 497; revenue from, in 
France, 498; retaliatory duties on, 
by England, 500; in Russia, 527; 
duties on, removed in Japan, 553; 
English acts to protect manufac- 
ture of, 555; value of, consumed 
in United States, 25; wages in 
manufacture of, as high in Eng- 
land as in United States, because 
as well protected — as high, 582; 
as well protected, 482; irT United 
States beer, ale, and porter pro- 
tected and exported, 610 

Ale, duties on imported, export of, 
610; revenue from, 613 

Algeria, 499 

Aliens, exempt from all taxation 
in Turkey, 488, 489 

Alloy in American dollar, 337; in 
English coins, 339-342 

Alpaca, wool and fabric, 672 

Altruism and altruistic labors, only 
useful in the very few% 323; al- 
truistic effects obtained by ego- 
istic means, 433; alleged lack of, 
except in the family, among 
Chinese, 552 

Ambition, its function in states- 
manship and industry, 400,623- 
626 

America, Central, United States 
buys from more than we sell to, 
600 

American school of Political Econ- 
omy, 16,36; influence of Ameri- 
can war on political economy, 
17; Saratoga convention of, 11; 
influence of American teachings 
in forming the Zollverein, 514 

American banks, crisis of, in 1857, 
377 

American colonies protected wool 
and wool manufacture varioush', 
676 



American Indians, ownership bj', 
23, 49-54; lived in stone age, 
645; agriculture, value of pro- 
duct, 230; tribal government 
among, reflected their economic 
condition, 4U2 

American inventions, plows, 264; 
reapers, 265; general, 596; glass, 
643 

American manufactures, in war of 
1812-1815, 641, 642; colonial, de- 
clared a nuisance by parliament 
and punished, 647, 648; wool 
and woolen manufacture pro- 
tected in the colonies, 676 

American opinion needed, 882 

American markets for Canadian 
lumber fix its price, 532 

American people, drink bill of, 25; 
meat, bread and groceries, bill 
of, 25; safety of travel, 28; area 
of America, 141; official govern- 
ing class in, 423; methods of 
in politics disappoint in some 
things, 424-425; insignificance 
of the accidents that prevail, 425; 
not alive to moral issues if the 
wrong doing is pervasive, 426; 
cost, war of, 1861-5, 438; crime 
among, 442; duties of, in pro- 
tecting American labor against 
excessive immigration by pre- 
venting the disruption of Chi- 
nese home industries, 548; de- 
mand for silks, 633; lost their 
mercantile marine in 1855 by 
previous blunder in trying to 
get cheap iron and steel through 
low duties, 648-650 

American ocean steamer lines lost, 
how? 657-660 

American trade, how carried, 656, 
659 

American Union, closely identified 
with the protective policj% 649, 
628, 629 

American vessels, reasons why 
must be American-built, 661, 662 

American workers, an immigrant 
differs from an imported product 
in economic effect, 321; Ameri- 
can workers inventive because 
well paid, and vice versa, 596, 597 

Amusements, state in respect to, 
431 



a B^EUA L IMJ/iJX. 



709 



Anarchy — auarcbists of Chicago, 
91; rehition of, to the state, 131; 
the organizaliou of labor in in- 
dustry is governed by the value 
sense on both sides and is largely 
beyond the pale of law, 309; in 
that sense anarchic, 310; anarchy 
not organization, 310 

Angel and angelet, 340-360 

Angora, wool, 672 

Animals, rudiments of government 
seen among, 378; absence of 
working animals in China and 
economic effects of, 540-545 

Anna — India, 338 

Annapolis, tirst colonial congress at, 
protected wool and wool manu- 
facture, 676 

Appropriation, all title and pro- 
duction begijis in, 125, 130 

Aciueducts for'^cities, 430 

Arbitration, 303; derives its effi- 
cacy from previous belligerency, 
435; in effecting emancipation In 
Russia, 526 

Area of United States compared 
with Europe, 141; of countries, 
230; of German Zollverein, 515 

Argentine Republic, unit of coin- 
age of, 338; American purchases 
from, paid by England's sales to, 
600; England's trade in cotton 
goods with, 689 

Aristocracy, and land-holding, 270; 
defined, 405; relation of, to num- 
bers, 405; gi/asi aristocratic views 
of Calhoun, Webster and Hamil- 
ton, 413; aristocracy of manipu- 
lators of conventions, 425; and 
protective policy in England, 557 

Arms, 382 

Army, health of British and 
French, 31; employed to extend 
foreign trade, 67; part of na- 
tion's wealth which is not pri- 
vate wealth, 66, 68; American 
policy of having no army, 68, 
437; destruction of values by 
allied armies in France, 70; 
destruction vf>. consumption of 
values by, in United States, 70; 
founds all governments, 435; in- 
cluding that of United States. 
438; an armj^ is a factory and 
what it makes, 439; cost of, in 



England, 479; in India, how paid 
and officered, 485, 486; of China 
is also the police, 537; organiza- 
tion and mode of drilling and 
fighting depend on condition of 
iron and steel manufacture, 646; 
officers of, in England, 406; 
Roman army furnished accord- 
ing to capital, 412; when army 
is chief power in the state the 
form of government indicates it, 
413; army part of the executive, 
416, 427; cost and ecouomjf of, 
437, 440; sustained in France 
and United States by conscrip- 
tion, 437; expenditure, 438; 
native and English officers of, 
in India, 486 

Art, is political economy an, 1-9; 
Adam Smith and Stewart so 
hold, 7; export of works of, 610; 
import and revenue from, 613; 
position of glass-making in use- 
ful arts, 638, 644 

Artisans of a whole country can 
not learn new trades, 66, 67; 
wages of American higher than 
English, and their work better, 
596; Birmingham Board of Trade 
and London Times on, 596; Span- 
ish and Dutch, how attracted to 
France, 673, 674 

Artel, in Russia, 526-530 

Ash, pot and pearl, export of, and 
duties on import, 610 

Asia, tribute paid by, 454; brown 
race prehistoric, 645 

Associations, wool growers and 
wool manufacturers, combine to 
form American tariff on wool 
and woolens, 677 

Assumption, substitution of for ar- 
gument, 25, 26; simpler than in- 
vestigation, 571 

Athens, its government the pro- 
duct of economic life, 402; aris- 
tocratic, 405; dependence for 
food, 570 

Attraction in the state, 433, 664; 
maj' be greatest toward a coun- 
try of higli taxation, 473 

Augers, English and American, 
prices, 590; qualities, 596 

Australia, registration of titles in, 
143; life of herdsmen and shep- 



'lo 



GENBBAL INDEX. 



lierds in, 317; effect of Aus- 
tralian and California gold on 
coinage, 385, a86; governments 
of, 407; colonization of criminals 
in, 445; tariffs in, 530, 531; ex- 
port of wool from, since 1810, 
676; crime in, 33, 442; prices of 
Australian wool abroad and of 
Ohio wool in Boston (chart), 679- 
681; England's trade in cotton 
goods with, 689 

Australia, West, lixed terms of of- 
fice, 407 

Austria, coinage unit, 338; alleged 
bankruptcy of, 448; war with 
Germany in 1866, 516, 523 

Austro-Huugary, government of, 
407 ; expenditure on army in, 
438 ; protection tariff essentially 
like those of France, Germany, 
etc., 530 ; product of iron, steel, 
and coal, 650 ; the basis of 
unity, 630 ; wool supply, 673 

Autocracy, in form of government 
not inconsistent with democratic 
methods, 526; or socialistic, 528- 
529 

Avarice, its function, sphere and 
cost, 201-210, 433 ; relation of 
to wages, 625 

Axes, English and American, 
prices, 590 ; qualities, 596 

B. 

Babylon, wookns, 669 

Bacon, revenue on paid by foreign 
producers, 586 ; exports and 
imports, 610,613 ; revenue from, 
613 

Baconian school, 24 ; doctrine of 
protection, 670, 671 

Baden, 515, 523 

Balance of Trade, Gregory King's 
essay on, 95 ; example of, 383 ; 
turned in favor of United States 
by protection in 1824-1834, 384 ; 
Doctrine of, stated, 393 ; Bacon 
on, 392-394; examples of in Uni- 
ted States from 1862-1883, 393- 
395, 599-602; doctrine true when 
statistical omissions are cor- 
rected, 395 ; discussed by Adam 
Smitli, 500 ; where no imports 
are needed, effect of, 599 



Balance of industries, A. Jackson 
on, 382 

Bank of England, organization 
and practice of, 389 ; profits, 
390 

Bankers, protected when home 
trade is secured against foreign, 
609 

Banks, Secretary Chase and banks 
of New York, 221 ; distrust of, 
by the poor causes hoarding, 
224 ; antiquity of. in China, 334 ; 
deposits and checks, 349 ; notes 
of, 350 ; national, 351 ; secured, 
351 ; state and private, 352 ; 
part of banks in crises, 371-378; 
limitations on Bank of England, 
374 ; stopped in 1857, 377 ; prac- 
tice of Bank of England in a 
panic, 378, 389 ; banks may be 
led into inflation by excess of 
goods, 384 ; may by discounts 
produce inflation, 389 ; may 
profit by crisis, 389 ; policy of 
standing by each other, 389 ; 
debts of, in United States, 448 ; 
part of banks in aiding govern- 
ment in Russia in its issues of 
paper money, 528, 529 ; relation 
of woolen industries to, 669 

Banks for savings, dejDosits in, 
in United States, 190 

Bankruptcy, effects of by gov- 
ernment, 221 ; in United States 
in 1854-7 produces crisis in 
England, 376-378; alleged, of 
Russia, 529 ; individual, avoided 
by national liquidation of debt 
at current values, 529 

Bark, tanning, protection on and 
export of, 610 

Barter, doctrine of, applied to 
domestic wages, 321-323 ; inter- 
national trade is not, 601 ; if it 
were it would be oppressive in 
refusing most of our products, 
602 

Bavaria, 515, 522, 523 

Beef, duties on, 382 ; paid by 
foreign producers as to United 
States, 586, 610, 613 

Beer, protection and export of, 
610 

Belgium, trade with Franco. 26 ; 
wool, 26; silks, coals, wool, hops, 



GENERAL INDEX. 



711 



glass. 2 ; travel in, 28 ; unit of 
coinage. 388 ; government of, 
407 ; proportion of improved 
land and tillage, 540 ; rates of 
wages in, 581, 511 ; urn- balance 
of trade against, 509-603 ; pro- 
duct of iron, steel and coal in 
1883, 650 

Bells and bronze, duty on and ex- 
port of. 610 

Beneficence, of the adjustment of 
each part of society to every 
other through interest, 400, 401 ; 
of the economic law that prices 
rise when production is small, 690 

Bengal, petition of cotton and silk 
maiuifacturers of, f(ir protection 
against English competition, 487 

Berlin, 405, 514 ; Berlin and Milan 
deci'ees, 640 

Billiaid tables, export of, 610 

Bimetallism, 361-369 

Birmingham, American cheapness 
in iron and steel wares affects it, 
596 

Blacksmith's tools, 383 ; wages in 
various countries, 511 

Blacking, export of, 610 

Blankets, protected, 383 ; wool for, 
672 ; consumers of, 589 ; not 
taxed, 590; shoddy in, 590; prices 
of, in England and America, 590 

Bolivar, monetary unit of Vene- 
zuela, 338 

Bolivia, monetary unit of, 333 

Boliviano, 336 

Boards, local diversity of in Eng- 
land 478 ; Boards of trade on 
destruction of silk industry in 
England, 636, 637 ; on Canadian 
manufactures, 665 

Bonanza farming, 262-272 

Bonds, national, bearing interest, 
relation of to notes, 392 

Bonnets, protected, 383 ; exports, 
610 ; imports and revenue, 613 

Books, duties, 383 ; imports and 
exports, duties on,' revenue from, 
610, 613 

Boots and shoes, recent strikes in, 
328 ; heavily protected from 
1816-1828, 383 ; wages in Mas- 
sachusetts and England, 583; 
production and prices in Amer- 
ica and Great Britain, 697, 698 



Borough boards and rates, 477-479 

Boston, glass, 644 

Bounties, in land, 144; on export of 
beet sugar essentially a tiction, 
506 ; the substitution of bounties 
for duties is generally a free 
trade notion, 597 ; objections 
to, 596; on silk culture, 632; on 
ships by British goverinnent, 
659 ; on sheep culture — killing- 
wolves, 676 ; on salt production 
in Michigan, 695 

Bourgeoisie in France, 403 

Brandy, English, 482; German, 520 

Brass, 383; in coinage, 339; success 
of American, 596 ; imports of 
and revenue from, 613 ; exports 
of, and duty on imports, 610 

Brazil, coinage of, 338 ; British 
control of trade of, 516, 670 ; 
tariff, 530 ; protection of metals 
in chart, 366 ; balance of Am- 
erican trade with, 600 ; benefited 
by removal of American duties 
on coffee, 600 ; England's trade 
with, 689 

Breach of trust, as a mode of con- 
quest, 484 

Breeding of sheep to any pattern, 
671 ; in France, 674 

Bread and breadstuffs, cost of, 25 ; 
relation of, to laboring class, 26 ; 
dealing in breadstirffs and pro- 
visions on boards of trade or 
produce exchanges, 105-120 ; 
elt'ect of rise in price during 
scarcity to cause economy in use 
of, 106-120 ; capacity of a few 
to produce, 220 ; black bread in 
India, 227 ; home market for, 
382 ; export of breadstuffs from 
France prohibited by Colbert in 
inlerest of manufacturer, 60 ; 
German trade, in, 519 ; effect of 
duties on trade betwecui Canada 
and United States, 533 ; bread 
not x'educed in price by rci)eal of 
corn laws, 558 ; revenue on im- 
ports, of into United States paid 
by foreign producers, 586 ; ex- 
ports' of, 610; imports and rev- 
nue from, 613 ; consumer pays 
no revenue on, 615 

Breech-loaders, American manu- 
facture for export, 596 



712 



GENERAL INDEX. 



Bremen, 523 ; steamer line to 
(American), how destroj^ed, 657 

Brewers, incidental protection to, 
in England, 482 

Bribery, agency in procuring the 
Act of Union, 493 

Brick, strikes and losses in, 328 ; 
England gives Ireland free brick 
but protects herself against Irish 
brick, 493 ; revenue collected 
from Canadians on, 586 ; ex- 
ports of, 610 ; wages of making 
in Massachusetts and England, 
582 ; imports of, and revenues 
from, 614 

British Empire (see Great Britain) 

British Indies, balance of trade of, 
against United States, 600 

British advice, through free trade 
leagues, 604 ; from John Bright, 
608 

British drumbeat, who pays the 
drummer, 686 ; extent of British 
trade in cotton goods with co- 
erced countries compared with 
her free trade, 689 

Bridges, Roman, taxes on, 454 

British cholera, 488 

Broad, coin of Cromwell, 340 

Broadcloths, wool for, 672 

Bronze, 339 ; duties on, and ex- 
ports of, 610 ; age of, 645 

Brooms, exports of, 610 ; imports 
of, and revenue from, 618 

Buckets, export of, from United 
States, 596 

Budget, annual, 453 ; of United 
States in 1888, 468 ; of 1882 and 
1878 in Great Britain, 479 ; of 
1878 in France, 498 

Buenos Ayres tariff, 530 

Building trade, wages of, in 
United States and Great Britain, 
583 ; strikes and losses iu, 810, 
338 

Bulgaria, roses in, 215 

Bullion, relation of, to money, 335 

Bureaucracy, 406 

Burlingame Mission, 535, 550 

Butter, under tariff of 1816 to 1828, 
383; duty on does not affect 
price, 586 ; amount of revenue 
collected by United Slates from 
('auadians on, 586, 591 ; export 
of, 610 ; import and revenue 



from, 613 ; export of butter and 
duties on salt, 696 
Buying, necessity of, in order to 
sell, a specious economic error, 
599, 602 



Cabinet, construction of, 410 

Calicut, trade of, 486 

Calicoes, importation into England 
prohibited, 489; in 1720 fined per- 
sons found wearing, 489, 670 ; 
Napoleon on, 678 

California gold, 385 

Cambrics, France prohibited, 500 

Cambridge, Massachusetts, glass 
manufacture, 641 

Camel, iron and steel brouaht by, 
from China 2000 B.C.. 645 

Canada (British possessions in 
North America), coinage of, 386 ; 
national policy of internal 
improvements and protection 
in, 531-533 ; Canadian liberty 
largely enhanced by her juxta- 
position to the United States, 
531 ; American duties on Cana- 
dian products largely paid by 
Canadians, 582-53^3, 591-594; 
relative taxes in Canada and Ver- 
mont, 576 ; free trade can only 
exist in connection with national 
and political unity, 574, 576 ; 
Canada reaps only where she has 
sown, 575, 576 ; Canada pays 
through the American tariff' for 
her political sovereiii:ntv, how 
much ? 598, 599 ; same, 615, 618 ; 
conditions of lumber trade be- 
tween Canada and the United 
States, 616 ; progress of manu- 
factures in, under, "national 
policy," 664-668 ; her growth in 
woolen and cotton manufacture 
compared with the northwestern 
States, 665 ; report of Dominion 
board of trade on, 665; England's 
trade in cotton goods with, 689 

Canals, effect of, 150, 152, 154 ; 
Chinese living on, 545 

Cast-steel, English and American 
prices of, 590 

Canvas, 652 

Candles, England gives Ireland 



GENERAL INDEX. 



713 



free candles, but sews by a pro- 
tected caudle, 493 ; exports of, 
610 ; imports of and revenue, 
613 

Caps, export, 610 ; imports and 
revenue, 613 

Carpenter's tools, 596 

Carpets, protected, 383 ; when in- 
troduced in Fnmce, 639 ; carpet 
wools not produced in United 
States, 675 ; duty on carpet 
wools is therefore a revenue 
duty, 678 

Capital, its relation to credit, 6 ; 
when scarcity in production is 
capital according to Tooke, 
116; wages are capital, 134; 
parts with labor when, 163 ; di- 
vision of product between capi- 
tal and labor, 163-166; capital 
emploj'S only for profit, 169 ; 
sharing of returns of industry 
between capital and labor, 172- 
181 ; in Great Britain, 176 ; 
capital replaces wealth con- 
sumed in production, 180 ; 
economy of, in organizing in- 
dustry, 188, 195 ; rates of protit 
depends on turning frequently, 
192 ; in particular enterprises de- 
clines in rates of profit, but not 
in general industry, 195 ; de- 
fined, 196, 197; fixed or circu- 
lating, 198 ; rules labor hj dis- 
tribution to want, 201 ; subdi- 
vision of, destroys, 203 ; accumu- 
lation of wealth is humane, 203 ; 
is not the antithesis of labor, 
211 ; is the opposite of a hoard, 
because always in social use, 211 ; 
effects of large capitals on indus- 
try', 219; liow massed to con- 
trol capital, 220 ; small capitals 
earn large rates of profit, 222 ; 
and vice versa, 223 ; all repro- 
ductive capital in constant social 
use, 224 ; large capitals promote 
wages, 237 ; basis of theory of 
diminishing returns, 228 ; bal- 
anced by theory of new fields, 
229; wages are capital, 234, 
285 ; capital the .guarant}^ of 
wages, 235; why land is deemed 
an investment of capital in 
United States and not in Eng- 



land, 241 ; Views of Hamilton, 
Bastiat, Roscher, as to capital in- 
vested in laud being an element 
in rent, 241 ; large capitals in 
farming, 262-267 ; economy of 
tenant farming, 268-272 ; econ- 
omy of large holdings of land, 
268-273 ; capital divides as a 
partner with the labor it em- 
ploys, 309-314 ; but in a mode 
governed by conditions, 312 ; 
will the tendency of capital to 
share profits increase ? 314 ; ex- 
haustion of capital a cause of 
crises, 378 ; Price on crises, 379 ; 
capital as a power among democ- 
racies, 402 ; how represented in 
Roman elections, 412 ; Calhoun 
on representation of capital, 412- 
415 ; not well represented in 
British House of Lords, 426 ; 
inducement to loan to govern- 
ment, 448 ; relative ecpiality of 
taxes on capital and on incomes, 
consumption, etc., 456 ; Ricardo 
on, 457 ; Mill on, 463, 464 ; plu- 
ral voting, 479 ; spoliation of 
capitalists in India leads to ces- 
sation of industries and great 
famines, 485-488, 625 ; loans of, 
by Germany, 520 ; gains to both 
profits and wages by capital in 
form of machinery and animals, 
540-543 ; increased employment 
for, under protection, not met 
by free traders, 560 ; capital and 
wages may both get higher pay 
in one country than another, 
579, 582 ;- Perry's error refuted, 
579-582 ; the taxing power is it- 
self a form of capital and as such 
may like all capital promote pro- 
duction, 585 ; reasons requiring 
a 42 per cent, tariff to ensure 
occupations involving equal 
' ' effort " with those conducted 
by foreign capital, 585 ; great 
capitals seeking profit are the 
best guaranty of liigh wages, 
625 ; difficulty of arriving at 
capital accurately in census, 643 ; 
capital invested in imported 
American ships would always be 
foreign capital, 661, 662 ; capital 
invested in manufactures iu 



714 



GENERAL INDEX. 



Canada, 665, 666 ; capital con- 
verted by steam inventions into 
the clieapest of all laborers, 681 

Carolina, North and South, silk 
raising in, 631 

Carpets, wages in, in United States 
and England, 582 

Carriage, wages in manufacture of, 
in Massachusetts and Great Brit- 
ain, 583 

Carrying trade, between England 
and United States, brought down 
to fi'ee competition in 1816, cap- 
tured by England (656) through 
protection to her iron and steel 
manufactures, (648) subsidies 
(659) reciprocitjr (655), piracy 
(663), and other phases of ' ' right- 
eousness," 608 

Catallactics, as a synonym for 
political economy, 7 

Cattle used as money, 333 

Caucus, for nominating candi- 
dates, 417 

Carrying trade, decline of, 656; 
causes, 640-664; extent of, 659 

Carriages, exports of, 610; imports 
of and revenue from, 613 

Cars, railroad, exports of, 610 

Carthage, 453; tribute of to Rome, 
454 

Carts, exports of, 610 

Cash, when credits turn into cash, 
money being cheap, 221 

Cashmere wool, 672 

Causes of transfer of any protected 
industries to protective countiies, 
681 ; made very plain where two 
competing countries having the 
same race and natural facilities 
protect opposite classes of in- 
dustries, 681; and these two 
classes migrate in opposite di- 
rections, but always toward pro- 
tection and from free trade, 682; 
of failure of Confederate States, 
688, 694 

Census, exceptions from, 25; can 
not take note of losses, 71; its 
value in economics, 38; popula- 
tion of United States by, 146 ; 
earnings of British people by, 
176; failures of enumeration in, 
224; Roman census a means of 
ponnecting wealth with voting 



power, 412; of 1880 in United 
States and 1872 in France, 486; 
no official census by Chinese gov- 
ernment, 537, 538; alleged cen- 
suses of China fictitious, 538; 
their contradictions and absur- 
dities analyzed, 539-543; census 
figures of United States are vague 
as to capital invested, 643 

Centralization, varies in republics, 
416; in France, 497; Germany, 
514-525; in Canada, 531 • 

Ceylon pearl divers, 414; Ceylon, 
England's trade in cotton goods 
with, 689 

Character, an element in economic 
success, 307; qualities which 
give political leadership deter- 
mined by economic conditions, 
402 

Charity, relation of, to industry, 
199-210; is evoked by social de- 
mand, 204; relation of, to luxury, 
213-215; to co-operative schemes, 
314; to utility of social services, 
325; altruistic effects obtained by 
egoistic means, 433; social effects 
of pursuing charity to the pre- 
judice of industry, 446 ; soup- 
kitchens and other relief during 
cotton famine in England, 690 

Charts, of prices of wheat in Eng- 
land, United States, and France 
from ' 1780 to 1880, 124; of im- 
migration into United States, 147; 
of relative values of gold and 
silver produced in two suc- 
cessive periods, 365; of pro- 
duction of precious metals, 366; 
of prices from 1790 to 1875, 
380-1 ; of prices and expansion 
in crises of 1837 and 1857, 387 
of growth of debt, 447; of 
revenues and expenditures of 
United States from 1790 to date, 
469; of miles of railroad built; 
iron and steel rails made; total 
rails made; rails imported; con- 
sumed; pig-iron made; rolled 
iron made; prices of pig and 
rolled iron and steel rails; pig- 
iron produced in Great Britain, 
and immigration for 23 years to 
1883, 651 ; prices of wool in Eu- 
rope and United States, and 



GENERAL INDEX. 



ns 



" wlio pays duties on wool," 681 ; 
of ;iver;ii!,e price of co(U)ii ))cr 
pound from 1790 to 1844, 687 

Clieajjuess, distinction between, in 
temporary supply and in pei'- 
manent sources of supi)ly, 117, 
508; large capitals promote, 206; 
in railway freights, 220; of 
nioue}', turns credits into cash, 
221; depends oh dimensions in 
production, 219; relative, of gold 
and silver, 341, 342; of a metal 
promotes its circulation if free 
coinage is given, 341, 342; causes 
no increase of consumption 
where motive is display, 475; of 
beet sugar, 505; opposition of 
English rehncrs to, 505; J. S. 
Mill holds that if other nations 
could carry for England cheaper 
than English vessels, this would 
be a deticiency needing remedy 
by protective laws, 557; not se- 
cured by repeal of corn laws, 
558; cheapest to buy may be 
dearest in use, 567; ultimate 
cheapness only attainable 
through present clearness, 569; 
cheap goods and machine labor, 
584; of American iron and steel 
wares in 1868 relatively to 
foreign, notwithstanding bar and 
pig-iron were dearer, 596; London 
Times on How is that? 596; 
where cheapness depends on 
having the entire home market, 
protection secures, 609; ell'ort of 
American free traders to get 
cheapness bj^ low duties caused 
the war of 1860-65 for secession, 
648-650; transient compared with 
permanent cheapness, 675 

Cheese, revenue paid by foreign 
Canadian producers on, 586; ex- 
port of, 610; import and revenue 
from, 613 

Chisels, English and American 
prices of, 590 

Cholera, economic causes, the 
origin of, 485 

Chicago, Board of Trade, mode of 
doing business on and economy 
of, 102-120; anarchists of, 91; 
city government of, 405 

Chicory, excise on, 481 



Children, provision for support 
of, by state, 477; labor in fac- 
tories in Kussia, 527; relative 
wages of, in Massachusetts and 
Great Britain, 482 

Chili, monetary unit of, 338; mili- 
tary successes against Peru, 440; 
tariff, 530; England's trade in 
cotton goods with, 689 

China (ware), exports of, 610; im- 
ports of and revenue on, 613; 
prices, how affected by Am- 
erican tariff and manufacture, 
621; introduced into France 
when, 639 

China, area, 141, 537; immigration 
from, 148; disphicement of 
Chinese labor by* English ma- 
chinery, 209; Adam Smith on 
wealth of, 215; unlike conditions 
of labor in, and lower earnings, 
297; economic and climatic con- 
ditions, effect on the form of 
government, 402; political parties 
in, 404; tax-collectors in, 453; 
taxes in, 455; opium war on, 
534; loss of sovereignty, as to 
tariffs, 533; exodus of the people 
would follow introduction of 
English railroads and banks, 536; 
sources of misinformation con- 
cerning, 536; opium trade detri- 
mental to (Cobden), 536; size of 
army, 537; censuses fictitious, 
538; 'analysis of their discre- 
pancies, 538-541; absence of 
beasts of burden and machinery, 
540; economic bearings of this 
absence, 540-545; limits on i^op- 
ulation in, 547; breath of re- 
ligious toleration in, 550; internal 
trade of, renders external trade 
not essential either to supply or 
prices, 552; balance of trade in 
favor of, against the United 
States, 600; iron and steel first 
brought from by camel, 645; 
England's trade with, 689 

Chinese empire, proportion of area 
and population to China proper, 
541 

Chinese, 148; immigration of, 321; 
paper money among ancient, 
334; opium trade detrimental to, 
536; social habits of the, 545; 



16 



GENERAL INDEX. 



must take American agricultural 
implements to China, 551 

Chrematistics, 11 

Christian world, in iron and steel, 
645, 646 

Church, increasing utility and dim- 
inishing cost (value) as society 
advances (Elder), 324 ; effect of 
union with state, 403 ; attitude 
of state toward, in Prance, 403 ; 
and land-owning gentry in Eng- 
land, 406 ; of Rome, 418 ; pur- 
suit of secular interests is health- 
ier economically than excessive 
addiction to tlie enthusiasms of 
the, 446 ; church-rates in Eng- 
land, 477 ; number of clergy in 
France, 496 ; large proportion of 
women in orders, 497 ; vital in 
Russia, 530 

Cider, England keeps protected 
cider and gives Ireland free 
cider, 493 

Cigars, protection to manufactur- 
ers of, in England, 481 ; revenue 
on, imported into United States, 
by whom paid, 586 ; export of, 
611 ; import and revenue from, 
614 

Cities, feeble class in, 121 ; again, 
219 ; rents in, 238-343 ; compar- 
ative failure of government of, in 
United States, 405 ; in France, 
416 ; taxes in, in United States, 
468 ; rates in, 477 ; in England, 
built on trade in India, 486 

Circulating capital, investment of, 
in fixed capital may produce 
crisis, 378 

Civilization, relation of ownership 
to, 23 

Civil service, in United States, 
416 ; corresponds to bureaux, 
416, 437 ; in India, 485 ; contrast 
in salaries paid to concjuered and 
conquering race, 485-486 

Classes, owe something to each 
other, 31 ; value to working, 
of an extra dollar, 583 ; fallacy 
of protected and improtected, in 
United States, 320 ; governing, 
in republic, 416 ; rich and poor, 
in same district, must be com- 
pared as to crime, 442 ; eilect of 
rank on crimes of men and wo- 



men, 442 ; enterprising class, not 
same as lenders to government, 
449 ; government in the interest 
of the English manufacturing 
class, 437, 438 ; in France, 496 ; 
of population forming British 
empire, 516 ; taxes on, in Ger- 
many, 538 ; social, in Russia, 
536 ; free trade in England and 
United States as a class interest, 
605, 606 

Clergyman, invented power loom, 
685 

Climate, effect of, on economical 
and political institutions, 403 

Clocks, American superiority in, 
596; exports of, 61 0; imports 
and revenues, 613 

Clothes, of wool, 672 ; shoddy, 
672 ; trade in French and Eng 
lish, 674 

Clothing, 520 ; wages in manufact- 
ure of, in Massachusetts and 
Great Britain, 589 ; strikes and 
losses in, 338 ; revenue on im- 
ports of, in United States, whom 
paid by, 586 

Clothing wools, 679-681 

Coals, trade between Belgium and 
France, 26 ; England, 37 ; acci- 
dents in mines, 32 ; quantity 
mined in Germany, 530 ; revenue 
paid by foreign producers on, 
imported into United States, 586; 
exports of, 610 ; imports of and 
revenue from, 613 ; consumer 
does not pay the duty, 615 ; 
world's product of coal in 1883, 
650 

Coasting trade, defined, 653 ; ves- 
sels in, how protected by naviga- 
tion laws in United States, 652- 
654 ; effect of ' ' free ships" if 
extended to, 654, 655 ; protected in 
England until 1849 ; ships built 
hy foreign capital could not 
safely take part in American 
coast trade, 661, 663 

Coercion, in the state, 433 

Coffee, free American import of, 
600 ; rise of price on, in Brazil 
when American duty removed, 
600 ; export, imports of, 610, 613 

Coffee mills, prices, 590 ; qualities, 
596 



GENERAL INDEX. 



in 



Coin, asserted to he, ;v form of 
credit, 6 ; -amount of in Unit- 
ed States in 1861, 221 ; not the 
sole money in certain senses and 
yet the sole money in others, 
330 ; standard and subsidiary or 
fractional, 335; notof invaria])]e 
value but less variable than bul- 
lion, 335 ; coins of United States, 
337; of England, 339-342; 
value of the standard coins of all 
nations certitied by the United 
States mint, 338 ; prices of 
rare, 340 ; of England, 342 ; de- 
mand for, produces linancial cri- 
ses, 377 ; history of debasing the 
coinage in England, 339-342 ; 
over-valued metal seeks the mint, 
341 ; under-valued the melting 
pot, 342 ; total gold coinage of 
France, England and the United 
States, 386 ; paying out coin as a 
means of resumption, 529 

Coinage in United States, 384 ; rap- 
idity of, from 1851 to 1875, 366 

College, electoral, in United States, 
how superseded, 419 

Colombia, monetary unit of, 338 ; 
tariff, 530 

Colonies, British, tariffs of, 530 ; 
protective, except in India, 531, 
064 ; policy towards American 
colonies, 631, 647, 648; tariff 
policies of, identical with that of 
the United States — all protective, 
664 ; British policy concerning 
colonies, 689 

Colonization, 445 

Colors, exports of, 610 ; imports 
and revenue, 613 

Combinations of labor, 300-307 ; 
Jevons on, 302 

Combing wools, 679, 680 

Combs, export of, 610 ; imports 
and revenue (included in fancy 
articles), 613 

Comitia, 412 

Commerce, as related to trade, 6 ; 
Gossen's theory of, 94; how all 
commerce seeks to concentrate 
in markets, 100 ; regulating 
inter-state, in the United 
States, 159; if business is more 
commercial than manufacturing, 
labor's share is less, 312; crises 



in commerce, 371 ; subtracting 
coin from, 384 ; number of per- 
sons engaged in, in France, 496 ; 
should be confined (Jefferson) to 
importing articles we cannot pro- 
duce, 596 ; America's foreign 
commerce increases seven-fold 
from 1840 to 1880, while per- 
centage carried in American ves- 
sels declines six-sevenths, 656 ; 
British commerce, how "fed" 
as to its main arteries, 657 

Commodity defined, 89, 197 ; de- 
fined by Marx, 91 ; what is a fin- 
ished, 671 

Common sense, and national 
safety, 570 

Commonwealth or state, 57-60 ; 
power over citizens, 58 

Commons, House of, 37, 133, 140 ; 
composed of, 406 ; origin and 
development of, from a body of 
petitioning tax suggesters into the 
supreme power, 408-412 ; minis- 
ters sit in, 411 ; members Tin- 
paid, 424 ; of Ireland, in 1799, 
plead for protection, not union, 
492 

Commune, Communal, Commun- 
ism, 41-54 ; charitable and I'c- 
ligious, 52, 54, 131 ; use of land, 
134 ; disappearance of, 139 ; 
spirit of communism in voting 
taxes where but few of the voters 
are taxpayers, 474 ; share of, in 
education in France, 497 ; in 
Prussia, 523 ; workings of prac- 
tical communism in Russia, 526 

Communal taxes, 523 ; ;m econ- 
omy in communal system in 
Russia, 529 

Competition, as a price-maker, 
90-120 ; between railways, 160 ; 
again, 220 ; in rents, 237-243 ; 
of uses for land, 246; with old 
industries stifles the young, 319 ; 
shut off in trade enforced on con- 
quered countries, 463 ; protec- 
tion to home industry is a form 
of international, 568 ; competing 
conunerce between countries 
having like natural gifts and 
conditions, Imt unlike artificial 
and acquirable gifts such as di- 
mensions in production, anteri- 



718 



GENERAL INDEX. 



ority, etc., which time and pro- 
tection will supply, forms the 
theme of tariff contention, 568, 
573 ; effect of competition be- 
tween producers in different 
countries to make protective 
duties a means of relief from 
taxation instead of a tax, 586 ; 
domestic competition repeals all 
increase of prices caused by a 
duty and avoids any economic 
occasion to repeal the duty, 596 ; 
lack of competition among em- 
l^loyers in countries reduced by 
spoliation of capitalists, 625 ; 
competition between Canadian 
and American producers, effects 
of on burden of duties and 
prices, 615-617 ; of Americans 
in silk production, 633-636 ; in 
glass, 644 ; in iron and steel, 646 
-651 ; Americans first expel the 
English from carrying-trade 
thi'ough protection, and are fin- 
ally expelled by them through 
free trade, 652-664 

Condor, 338 

Confederate States, financial strug- 
gle with, 231, 353-355 ; declara- 
tion of war with, 417 ; effects of 
Avar on Northern prosperity, 380 ; 
fall in value of its notes, 353 ; 
represented the free trade and 
slave labor side of economic 
questions — causes of rebellion, 
687, 688 ; experienced in making 
salt, 694 

Confederation of German States, 
515, 521-525 

Conflict among economists, 5-9 ; 
as to government, 131-133 ; as to 
money and prices, 343 ; as to 
theories of equality in taxation, 
456 ; as to incidence of taxes, 
459, 460, 467 

Congo, socialism on the, 23 ; also 
slavery, 23, 41-54 

Congress, action of, as to railways, 
145-161; as to contraction of cur- 
rency, 392 

Connecticut, in 1790, 140, 252, 546 

Conquest, of barbarians for trade 
purposes, profits of, 484 ; of 
India, how effected, 484 ; of 
sovereignties merged in Ger- 



many, 522 , of China as respects 
tariff", 534^536 ; of Japan as 
respects tariff, 553, 554 

Conscription, 437 

Constitution, in all countries, 404 ; 
in United States, 407 ; Calhoun's 
definition of constitutional gov- 
ernment, 413 ; power to declare 
war, 417 ; executive and judicial 
departments directly govern, leg- 
islative and constitution check 
or control these in governing, 
416, 417 ; electoral college in 
United States shorn of its con- 
stitutional responsibility by rea- 
son of its meeting at different 
points and voting at the same 
time, 420 ; constitution regarded 
as distrusting the wisdom of the 
people, 420 ; its most original 
and admirable feature, 426 ; 
constitutionality is habit in Eng- 
land, 426 ; checks and balances 
of constitution in United States, 
132-135, 427, 428 

Constitution of United States 
shovild be amended (Jefferson) 
to allow internal improvements 
out of surplus revenue rather 
tlian reduce duty on salt, 640 ; 
inhibition on interstate duties 
may be an economic burden in 
part, 665, 666 ; of " Confederate 
States," 688 

Consiuner, causes value, 86 ; his 
place in industry, 87, 94-100 ; 
how affected by grain-dealing 
on boards, 106-120 ; consumer's 
wealth, 216 ; riches can not add 
to capacity to consume wealth, 
224 ; i-elation of consumer to 
cost of rent and produce, 242 ; 
consumers produce prices, 320 ; 
of British beer pay more (Shad- 
well) because of protection to 
brewers, than they would if they 
had free trade in beer, 482 ; 
Doctrine that " consumer pays 
the duty," forgotten in Act of 
Union, England taking the 
" taxed goods " and giving Ire- 
land " free goods," 493 ; increase 
of demand of consumer causes 
improved tillage in Germany, 
520; consumer does not always 



GENERAL INDEX. 



719 



pay the duty, 533 ; duties ■which 
consumer does not pay, 58(5 ; 
Chicago Tribune on what the 
consumer pays, 593 ; how duties 
repeal themselves so far as the}'' 
are protective taxes, 59G ; class 
of imports on which consumer 
can not be charged with the 
duties — the producer pays them, 
610-617 ; consumer of French 
woolens, 673 ; of English, 673 ; 
consumers of wool (manufact- 
urers of woolens) combine with 
producers in framing American 
tariff, 677, 678 ; fallacious esti- 
mate of the increased cost of 
wool to consumers, 682 ; contra- 
dicted by the testimony of an 
association representing the 
entire force of wool consumers, 
681 

Consumption, of meat, bread and 
spirituous liquors in the United 
States, 25 ; is the motive to pro- 
duction, 88 ; of commodities dis- 
tinguished from consumption of 
wealth, 197 ; consumable wealth 
not the subject of avarice, 205 ; 
demand for, how controlled, 
220 ; total consumption by people 
in United States, 224 ; limits on, 
225 ; of rich and poor, 226 ; 
elfects of taxes on, 458 ; taxes 
on consumption of luxuries ad- 
vocated by Dr. Smith, 461 ; con- 
sumption of wool in France, 
England, Austro-Hungary and 
America, 672, 673 ; influence of, 
on production, 256-263 ; of a 
d(miestic product involves home 
consumption of two products, 
foreign of one, 560, 578, 579 

Contracts, freedom and number of, 
grow with private titles, 23 

Contraction, after inflations of cur- 
rency, 359-360, 391 ; efl:"ect of, 
on prices, 392 

Convention, House of Lords once 
a, 408 ; system of nominating by, 
422 

Convicts (in United States), 440 ; 
Means of reforming, 445 

Coopers' tools, export of, 596 

Co-operation, concealed uiider the 
forms of feudalism, 225 ; experi- 



ments in, 313 ; at Guize, Minne- 
ajjohs, Peacedale and New York, 
313 ; to succeed as a business 
must profit employer, 314 

Copper, sole money in early Rome, 
334; coinage in England, 342 ; 
Gernvin trade in, 519 ; revenue 
paid by foreign producers on 
copper ore, 586 ; exports of, 
610 ; imports of and revenue 
from, 613 

Copyright to authors and pub- 
lishers a form of protection to 
industry, 675 

Cordage, England hangs Irishmen 
on free rope but Englishmen on 
a protected rope, 493 

Cordova wools, 672 

Corn, law governing price of, 96 ; 
how in 1795-6, 96 ; price depends 
on demand, 96 ; dealing in on 
Produce Exchange, 105-120 ; 
effect of short crop on price in 
1881, 106. 117; prices of, from 
1780 to 1880 in England, France, 
and America, chart 112, 115-117; 
Tdoke on prices of, 115, 117 ; 
elTect of seasons on prices, 113 ; 
ellcct of cost of i^roduction on 
prices, 114 ; prices of, in 1620 to 
1812, 116-117; cornering the 
market, 104 ; cost of wheat pro- 
ducing, 219 ; rate of multi]ily- 
ing, and effect of thin planting, 
231 ; of rents and transporta- 
tion, 247 ; not made cheaper by 
repeal of protection to, 118-121 ; 
biit crisis produced by change 
of source of supply, 376 ; Ire- 
laud's interest in duties on corn, 
491 ; export of corn prohibited 
by Colbert, 501 

Corn crushers, American export 
and cjuality of, 596 

Corners, in grain, 101-111 ; in 
labor, 300-302 

Corn laws, agitation for repeal of, 
aided by errors concerning 
prices, 1812-1817, 112, 119 ; 
Brodrick, Shadwell, McCulloch, 
Encvclopedia Britannica, and 
Hvndman on, 117-120, 553; 
effect of repeal of, 470 

Corporations, ownership by a form 
of private wealth, 54, 57, 134, 



720 



GENERAL INDEX. 



135, 139, 151-160, 220, 221 ; ad- 
vantages of corporations over 
individuals as producing agents, 
57 ; shares of, sell at a sum on 
which they will pay double in- 
terest, 179 ; stock of, how con- 
trolled, 220 ; tendency is toward 
corporations in labor employing 
rather than co-operation, 314 ; 
power of Bank of England to 
avert or promote crises, 389 ; 
power of corporations succeeds 
that of eloquence and political 
managers, 402 ; taxed in China, 
455 ; debts of, held abroad, and 
crises, 377 

Cost, of liquors, meat and bread 
missions and instruction in 
United States, 25 ; of production 
as a cause of value, 11 ; not 
measurable, 11 ; nor computa- 
able, 355 ; repudiated by Tooke, 
114 ; relation of, to utility and 
value, 81-99 ; error to suppose 
prices are immediately regulated 
by, 110 ; yet in long run how 
affected, 220 ; of a credit cur- 
rency, 356 ; a fiat money or labor 
money without cost impossible, 
358 ; desire to display cost, 475 ; 
cost of collecting revenue in 
England, 479 ; of beet sugar in 
1799, 503 ; tariff duties some- 
times count as part of producer's 
cost, 532 ; cost in effort not 
identical with cost in mone_y, 
574 ; cost of supplying the con- 
ditions which render American 
markets the best in the world, 
575 ; of machine labor is not 
synonymous with cost of human 
labor, 209, 580 ; all costs of com- 
modities, services, and all ex- 
penditure is a compensation to 
labor, 626 ; of beginning a new 
manufacture, 639 ; of British 
policy of subsidizing ocean-going 
vessels (659) compared with the 
profit, 663 

Cotton (wool or raw material), price 
of, when crop is large or small, 
96 ; capacity of one man to pro- 
duce, 220 ; growth in manufac- 
ture in war of 1812, 380 ; pro- 
tected, 383 ; relation of to slavery, 



384 ; value of destroyed in India 
by failure of manufactures, 48S; 
converted into manure, 488 ; 
manufacture of, in Canada, 531 ; 
interior trade of Chinese in, 
552 ; cxiltivation of, partially ex- 
tinguished hy importations in 
Japan, 554 ; wages in manufac- 
ture of, 5S1 ; in United States, 
France, and Gi'eat Britain, 581, 
582 ; fibre of, compared with 
wool, 672 ; ph^'siology and an- 
tiquity of the cotton plant 
in India and China, 683, 684 ; 
modern growth of the cotton 
manufacture, 684 ; inventions 
connected with its modern evo- 
lution, 685 ; production of "cot- 
ton wool " stiniTilated by a pro- 
tective duty, 686 ; invention of 
the gin, 686 ; export of cotton, 
rapid growth of, 686 ; average 
price of (shown hy chart) from 
1790 to 1844, and Carej^'s state- 
ment of decline in values of cot- 
ton, 687 ; cotton famine in Lan- 
cashire during American war, 
689-691 

Cotton gins, American export and 
quality of, 596 ; invention of, and 
effect on production of cotton, 
686 

Cotton goods, protected, 383 ; pro- 
tection of, in United States op- 
posed by producers of raw cot- 
ton, 384-385 ; manufacturers of 
in India petition for the same 
protection fiom English goods as 
England exacts from theirs and 
are denied. 487 ; former manu- 
factures in Turkey, 490, 513 ; 
trade of England with Zollve- 
rein German states in cotton 
goods, 519 ; weight of imports 
and exports, 519 ; acts to protect 
manufacture of, in England, 555; 
effect of import of, from Eng- 
land into India, 66,67 ; exports 
of, from United States, 610 ; 
imports of and revenue from, 
613 ; American cottons lead in 
English markets in quality, 623 ; 
necessity of manufacturing the 
entire American cotton crop in 
America at an early date to keep 



GENERAL INDEX. 



'721 



labor emploja'd, 628-629 ; manu- 
facture protected iu Canada, 
growth, mills, capital, hands, 
product, and prices, G64-668 ; 
kinds of cotton and woolen 
goods 13 rod need in Canada, 666 ; 
Cotton trade in the germ in 1795 ; 
rapid growth of, and of city of 
Manchester, 685, 686 ; extent of 
production of cotton goods in 
England in 1861, 689 ; American 
imports and exports of, 691 

Cotswold wools, 672 

County, debts of, iu United States, 
448 ; rates for county uses in 
England 477 

Coventry, decline of silk Aveaving 
in, 636 

Credit, conflict as to its being 
capital, 6 ; grows with private 
titles, 23, 211 ; credit is wealth, 
67 ; Confederate rebellion sub- 
dued on credit, 221 ; credit 
money, 335 ; relative quantity 
used, 344 ; exchangeable credit 
is qtiasi money, 346 ; credit 
attracts gold, 350 ; credit based 
usualty on securities or debts 
receivable, 352 ; volume of, 355 ; 
how inflations of credit may be 
caused by reduction of tariff 
duties, 383-385 ; and expansions 
in volume of notes and dis- 
counts, 387 

Crime, in Great Britain, 32 ; in 
Ireland, 33 ; in Austria, 33; Iiomi- 
cides in Southern States, 34, 57- 
60 ; crime abated by war, 221 ; 
right of free speech does not ex- 
tend to incitements to crime, 
307 ; relation of crime to the 
state, 431 ; extent of, in United 
States, 440 ; crime a problem in 
economics, 441 ; offspring of 
liberty, 444 ; land not alienable 
for crime in Russia, 526 ; colonial 
manufactures and exports of 
machinery to American colonies 
made criminal, 647, 648 

Crises, relation of labor to, 190 ; 
large capitals lessen suffering in, 
222 ; crises of various kinds, 
371 ; of 1857 in England, 376 ; 
exhaustion of capital produces, 
378 ; cause of crisis of 1887 in 



United States, 382-385; due to 
delay of profits on good enter- 
l^rises, 391 ; crises minimize the 
pain of failure in industries no 
longer sociallj^ needed, 396 ; and 
steer invention and capital 
into needed channels, 397 ; may 
be the penalty of mismanage- 
ment or ignorance on the part of 
government, 397 ; of 1816-1819 
in United States, 514 ; of 1833, 
515 ; silk mania and crises 1828- 
39, 632, 633 ; peace and free 
trade crisis of 1818-19, 641, 642 

Crockery, decline of tariff tax, 
with increase in domestic pro- 
duction — the duty not identical 
with the tax, 621 

Crops, how values of increase, 
258 ; share of, taken for taxes, 
455 ; ratio of crops to taxes in 
India, 486; rotuliDii of crops 
under proteclidii, oio, 571 

Crusades, 447, 550 

Cuba, monetary unit of, 338 ; 
trade of with United States, 600 

Culprits, 440 

Crown, unit of Depmark, Norway, 
Sweden, 338 

Crown, lands, produce from, 479 

Cultivation, began where, 645 ; 
the quality of, depends on near- 
ness to markets and position 
relative to demand, 241-253 ; 
extensive cultivation exhausts 
soils, 253-256; intensive improves 
soils, 256-274; of food plants, 
evolution, 275-280 ; decline of, 
in Ireland, 274 ; of laud in India, 
486 ; labor turned to cultivation 
of land by crises, 397 ; land 
going out of cultivation in Tur- 
key, 490 ; of vine in France, 
497 ; of land in Germany, 520 ; 
ratio of tillage to entire area in 
Belgium, New Jersej^ China, 
540 ; England, Wales, Kiangse, 
France, Yunyan, Switzerland, 
Illinois, Foo-Keen, Connecticut, 
New York, Massachusetts, 
Rhode Island, and Kwei Choo 
compared, 546 ; wheat-lands of 
England go out of cultiva- 
tion after repeal of corn laws, 
559 



V22 



GENERAL INDEX. 



Cultivators (machines), siiperiority 
of American abroad, 596 

Cunard Line of steamers, by wliat 
means it killed the Collins line, 
657, 664 

Currency (see Money), national 
debt is international currency, 
its joayment contraction, 354 ; 
relation of, to prices, 386-389 ; 
of Russia, suspensions and re- 
sumptions on 528, 529 ; acts to 
protect in England, 555 

Curry-combs, export of, 596 

Customs, revenue from, in United 
States, 468 ; chart showing ratio 
of customs to total revenue in 
United States, 469 ; how the 
same duty can produce both 
revenue and protection, 469 ; 
revenue from, in England, 479 ; 
decline in, since 1858, 480 ; in- 
crease on tobacco, 480 ; number 
of customs oiflcials in Great 
Britain and United States, 482 ; 
customs of France, 498 ; cus- 
toms union or " Zollverein " in 
Germany, 514 

Cutlery, Americ3,n errors taught 
in the colleges but corrected in 
the factories, 594-598 ; whatever 
people can make buttons with 
which to buy ciitlery can make 
cutlery with -oiiich to pay for 
the buttons, 596 ; if we have the 
bones we should make the but- 
tons — if we have the ores we 
should make the steel, 598 ; 
Jefferson says so, 598 ; English 
manufacturei's pay part of 
American duties on, 621 

Cut nails, American report of, 
596 

D. 

Damascus, once a centre of the 
cotton and steel manufacture, 
490 

Dearness, no check on consump- 
tion, but a stimulus, when the 
motive of consumption is dis- 
play, 475 ; British beer made 
dearer according to free-trade 
theprists by lack of free foreign 
beer, 482 ; permanent dearness 



ensured by breaking down 
domestic sources of supply 
wherever the foreign supply is 
inadequate, 510 ; is in inverse 
ratio to weight (tine goods make 
small parcels), 518 ; better than 
cheapness as to things nationally 
desirable (Mill), 557 ; in imple- 
ments the best is cheapest what- 
ever it may cost {London Times), 
596 ; when protection against 
imijortation does not involve 
dearness in first instance, 609 ; 
no protective duties occasion 
dearness but those that are stim- 
ulating a new industry, 624 ; cost 
of beginning new industry 
(glass), 639 ; dearness of the 
cheap goods got under low 
duties but paid for by war of 1861 
-65 and loss of American carry- 
ing trade, 648-650 

Debasing coinage, in England, 
339-342 

Debt, effects of, 211 ; on value of 
currency, 221 ; on credit and 
cash payments, 221 ; the basis of 
credit, 352 ; Foreign debt may 
produce financial crises in coun- 
try owing it (McCulloch), 377 ; 
bad economy to pay debt with 
tools of trade, 383 ; debt of 
United States extinguished, " 
384 ; has certain effects of con- 
traction, 394 ; Fawcett on, 392 ; 
MacLeod on, as a means of 
payment, 393 ; expenses of, in 
Europe and America, 438 ; chart 
of growth of, 447 ; aggregate 
debts of nations, 448 ; aggregate 
of public and private, in United 
States, 448 ; Adams and Fawcett, 
Lord Derby, Iron Age, and 
Professor MacLeod on economic 
aspects of national debt, 447- 
451 ; political aspects of national 
debts, 450 ; repudiation or col- 
lection, 450 ; European debts 
cannot fall due, 450 ; are sav- 
ings banks, 450 ; effect of pay- 
ing off national debt, 450 ; 
national borrowing tends toward 
socialist expenditure, 451 ; inte- 
rest on debt of United States 
in 1883, 468 ; interest on debt 



OPjNEEAL tndex. 



723 



of England, 479 ; expenditure 
on debt in France, 497 ; cx]X)rt 
of, from United States to Ger- 
many, niS ; alleged .scaling of 
debt" in Russia, 529 

Declaration of Independence, the- 
ory of equality in, 133 

Declarations of war, practically 
obsolete, 417 . 

Decline, of cultivation of wheat in 
England, 559 ; of silk maniifac 
ture in Enghmd under free trade 
in silks, 634 ; of importation of 
raw silk into England G35 ; 
Porter on, 635, 63(i, 687 ; of 
American shipping under free 
trade principles applied to carry- 
ing trade and iron and steel 
industries from 1816 to 1855, 
640, 653-664 ; of wool produc- 
tion and sheep in America under 
tariff reduction of 1883, of wool 
grown in England, 681 ; decline 
in price of cotton caused by 
expansion in its production, 687 ; 
in price of Michigan salt, 695 

Deductive method, defined ; is 
metapliysical and a priori ; Mill 
and liicardo are exponents of ; 
begins in assumption and ends 
in obscurity and error, 9-14 

Defence, national, things essential 
to, ,556; conviction of "Con- 
federate States " after the war, 
688 ; manufactures essential to, 
688 

Definitions of terms : Political 
economy, 1-9 ; economic philos- 
ophy, 1-9 ; evasiveness of econ- 
omic definitions, 5, 13, 211 ; 
metaphysical method, 9 ; his- 
torical method, 17 ; ethics, 33 ; 
of statistics, 34 ; Manchester 
school, 40 ; wealth, 41 ; pover- 
ty, 43 ; Carey's and Fawcett's 
definition of wealth, 43-48 ; 
family, 60 ; social wealth, 63 ; 
national, 67 ; the want pressure, 
77 ; value, 79-87 ; wage fund, 
87 ; demand, 87 ; commodity, 
91 ; anarchism, 91 ; wealth of 
two kinds, 93, 316; Gossen and 
Jevons' theorv of value, 94-99 ; 
marlvets, 99-103 ; prices, 103- 
124 ; title, 135-140 ; land sys- 



tem, 140-150 ; railway system, 
150-162 ; employers and work- 
ers, 153-168 ; profit, 163-184 ; 
wages, 184-187 ; reproductive 
and enjoyable wealth, 216 ; of 
value of land, 337 ; of economic 
rent, 338 ; of labor, 381-293 ; by 
Devas, Perry, Elder, Adam 
Smith, Roscher, McCulloch, 
MacLeod, Mill, Jevons, Carey, 
Ricardo, Cairnes, 281-294 ; of 
money, 329-336 ; bills of ex- 
change, 346 ; of free coinage, 
361 ; crises, 370 ; of despotic 
and free government, 404 ; of 
monarchy, 405; of aristocracy, 
405 ; of bureaucracy, 406 ; par- 
liamentary government, 406 ; re- 
sponsible government, 406 ; of 
republic, 412 ; of federal repub- 
lic, 415 ; of the industrial state, 
443 ; functions of political state, 
433-485 ; crime, 441 ; farming 
the revenues, 477 ; poll tax, 53 ; 
of local taxation and national in 
United States, 468 ; of rates. 
476 ; of ad valorem duties, 481 ; 
of British free trade, 491 ; of 
German Zollverein as designed 
by List, 514, 515 ; of mir and 
artel in Russian communism, 
536-529 ; of production, 533 ; 
of American vessels and of ocean 
and coasting trade, 653-653 ; of 
the state as the sum of all indus- 
tries that are intrinsicallj^ profit- 
less, but socially profitable, 700, 
701 ; of private and public pur- 
poses, 703, 703 

Degrees, sale of taxed, in Cliina, 
455 

Delaware, colony of, protected 
sheep and wool manufacture, 
676 

Demand, cause of value, 88 ; gov- 
erns distribution of wealth 
through investments of capital, 
313 ; how controlled by large 
capitals, 330 ; causes rents, agri- 
cultural and urban, 337-343 : 
views of economists on, 337- 
343 ; of American women for 
silks, 633 

Democracy, due to ('i|uality of 
economic conditions eillier 



124: 



GENERAL INDEX. 



among all or among the domi- 
nant class, 402 ; entire absence 
of capital is democratic, 402 ; 
except as to the slaves, 402 ; 
largeness of the class it means to 
serve, 424 ; democratic party 
under Jefferson regard a surplus 
of revenue as not a good reason 
for withdravsring protection from 
salt, 640 

Denmark, monetary unit of, 338 ; 
government of, 407 ; our bal- 
ance of trade with, 599-601 

Deposits in bank, 349; run for, and 
crisis, 371-373, 377, 385-389 

Destruction, of industries the only 
alternative to protecting them, 
461-462, 561 ; Shadwell on, in 
Dutch Indies, 480 ; Humboldt 
on, in Mexico, 480; of 
opium in China, 534 ; of Chinese 
manufactures, needs only a free 
introduction of English means 
of transportation and lending 
money, 536 ; destruction of val- 
ues by strikes, 310, 328 ; of 
Roman farming by distribution 
of free corn, 317 ; requires more 
wisdom (to avoid doing injurj') 
than protection, 561 ; of Portu- 
guese wool and woolen industry 
by treaty, 669 ; of qiiinine in 
United States, 692 

Diet, vegetable, its relation to in- 
dustry, 298 ; of the poor in In- 
dia, 486, 487 

Dimensions, when cheapness in 
production depends on, it must 
begin at some relative loss, or 
not at all, 319 ; of iron and steel 
manufacture essential to cheap 
iron and steel, 509, 652; in cotton 
production, effect on price, 687 

Direct taxation, in England, 476 ; 
difficulty of telling how much 
any area pays, 478 

Discounts, libei-al, may produce 
the intiations which end in 
crises, 389 

Discriminating duties, 652,665; dis- 
criminating port and dock dues 
against American ships, 655 

Distillers, incidental protection to, 
482 

Distribution, of returns of industry 



between rent, wages, interest, and 
profits, 173-184 ; of commodi- 
ties distinguished from distribu- 
tion of wealth, 196 ; of wealth 
precedes production of com- 
modities, 196, 198 ; economic 
distribution is just, 199 ; its re- 
lation to philanthropy and char- 
ity, 200 ; Mill, Ingersoll, and 
Karl Marx on, 200-215 ; by in- 
vestment and by luxury, 213- 
215 ; equality of enjoyable and 
consumable products compared 
with inequality in control of re- 
productive wealth, 199-212, 224 ; 
crime aims at a redistribution 
by unlawful means, 441 ; of tax- 
es in Great Britain, 476 ; of in- 
dustries in France, 496 ; of 
w^ealth and work under the 
Commune in Russia, 526 ; of pro- 
duct as affected by depriving 
working classes of free access to 
the land, 574 

Disunion, allied to free trade in 
all nations, 637-630 

Diversity of industries, essential to 
happiness as well as industrj^, 
317-319 ; how to effect it, 382 ; 
in France leads to self-employ- 
ing, 496 ; is not inequality of fa- 
cility in producing the same 
thing, but equality in producing 
unlike and exchangeable things, 
513 ; protection only increases 
prices when increasing the di- 
versity of industries, which re- 
duces prices, 564; northern States 
grew rich during war of 1861 to 
1865, owing to, while southern 
States were wasted by lack of, 688 

Diversity of natural gifts, gives 
rise to a commerce which pro- 
tectionists put on the free list, 
and free traders in some in- 
stances place high duties on, 
573 ; it is only artificial gifts — 
capital, anteriority in jiroduc- 
tion, etc. , that protectionists de- 
sire protection against, 573 

Division of labor incident to large 
capital, compact populations, and 
great diversity of pursuits, 219; 
effect of lack of, on mental con- 
dition, 317 



GENERAL INDEX. 



121 



Dogma, STibslituted for inductive 
science, 571 

Dollar, of United States standard, 
336, 337; of Canada, Liberia, 
Mexico, 338; Wendell Phillips 
on the moral value of a dollar, 
583 

Dominion of Canada, report on 
manufactures, G64-668 

Donskoi wools, 672 

Door-knobs, English and Ame- 
rican, prices of, 590 

Door-latches, American, export of, 
596 

Doubloon, 338 

Draclima, monetary unit of Greece, 
338 

Drain, of rent to foreign landlords, 
487; of native M'ealth to pay for 
forced importations (Japan), 554 

Drainage, a local rate for, 477 

Drink, cost- of , 24; of beer in Eng- 
land, 482; of wines in France, 
497; effect of, on labor in Russia, 
537 

Drugs, protection to in 1828, 383; 
export of, 610 

Dry goods, American market the 
cheapest, 623 

Dutch government in East India, 
order destroying spice trees, 480 

Duties, effect on price, 25-26; when 
they come in as protective, 319; 
in 1861 duties on imports sus- 
tained the credit of government, 
353; protective duties may pre- 
vent commercial crises, 374-390; 
under tariff of 1824-28, 383; 
change from ad valorem to 
specific, 383; low duties produce 
universal disaster in 1837, 382; 
and 1857, 385; made protective 
to manufactures by Institutes of 
Manuin India, 453; revenue from 
in United States, 468; Turkey 
limited to 3 per cent, duties on 
imports from ] 675 to date, effects 
of, 488-492; duties high on Irish 
goods going into England, low 
on English goods going into 
Ireland under Act of Union, 493; 
Dr. Smith on protective and 
retaliatory duties, 556; must 
either cause revenue only or sup- 
press or protect production, 563; 



protective duties repeal them- 
selves at the proper time, 563, 
564; are for revenue only, 
" wherever there is and can be no 
competing domestic product," 
573; provided domestic com- 
petition is not jirevented by law; 
in which case they are for 
revenue plus the destruction of 
native industry, 481 ; paid by 
foreign producers, schedule of, 
586; Mill's concession bungling 
but adequate to the point, 587; 
duties in other countries reduce 
profits of English producers, 
588; working of duties relatively 
to bounties, 596; importing non- 
comijetiug (tropical) products 
free works no increase in our 
exports to countries producing 
them, 600,601; on agricultural 
implements, 610; articles on 
which duties chiefly paid by 
foreigners, 610-613; on silk in 
United States, 634; in En2,land, 
637, 638; effect of repeal of, 635, 
636; on iron and steel rest on 
manufacturers of iron and steel 
goods, 647; discriminative on 
iron and steel carried in British 
ships, 648; discriminating duties 
on tea brought in American 
ships, 653; progressive duties on 
wool proposed by Benton, 676; 
tariff' on since 1824, duty on 
carpet wools a revenue duty, 
678; comparison of invoice 
prices with foreign quotations 
on wool show that foreign prices 
" dip " downward by amount of 
duty to get the wool into Ame- 
rican market, 679, 680; chart 
showing wlio pays duty on 
wools, 681; on salt in United 
States, 695; effect of reducing 
American duties to send up 
foreign prices, 695 
Dye-stuffs, duties on and export 
of, 610: on wool, 672; in France, 
674; Tyrian dyes, value of, in 
Roman purple, 669; from coal 
tar (aniline), 669 

E. 

Earthenware, export of, 610; im- 



^26 



GENERAL INDEX. 



ports of and revenue from, 613; 
prices in New York, bow 
affected by duties and produc- 
tion, 621 

East Indies, balance of trade 
against United States, 600 

Eas^ India Company exported 
none but Englisli clotb, 670 

Economy, in the individual con- 
curs with progress of society, 
308; of coin and credit, 355-358; 
Adam Smith on, 356; in the 
wage contract, retailing, etc., 
433; economics of the Chinese 
but little known to western 
nations, 548; Chinese economy 
has its credit side, 549; as well 
as its debit side, 543; economy 
of protection, 609-630; in iron 
and steel, 648-650; in the sub- 
sidy policy of England, 659-663; 
in privateering as compared with 
svibsidies, 663; false economy of 
United States mail service nets 
both loss and disgrace, 664 

Ecuador, monetary unit, 338 

Edge-tools, wages in American and 
Eiu-opean, 581; Canada exports, 
668 

Education, and the State, 434; and 
crime, 441; illiteracy in France, 
497; expenditure on, in France, 
497; care of, in Germany, 521, 
523; in glass-making, 644; a 
mode of protection, 675 

Effort, tariff required to protect 
where equivalent effort pro- 
duces, 585 

Eggs, yolks of, duty and revenue 
on, 586; exports, 610; imports 
, and revenue, 613 

Egypt, civilization attended pri- 
vate ownership in, 23; early use 
of money in, 334; present unit 
of coinage and its value, 338; 
taxes and tribute in prehistoric, 
452, 453 ; tribute paid to Rome, 
454; food exported during 
famine, 570; ancient use of 
glass in, 638; iron and steel in, 
645, 646; England's trade in cot- 
ton goods with, 689 

Elbe, change in commerce on the, 
518 

Elections, cost of, in United States, 



414, 416; modes of, in use prior 
to American constitution, 418; 
where many constituencies vote 
separately and simultaneously, 
an anterior nomination results, 
419; electoral commission, 421 

Eloquence, its period of ascen- 
dency in government, 402; 
British and American speeches, 
411 

Emancipation, in Russia how 
effected, 526 

Emigration, always at first at- 
tended \)j hardship, 318; a sub- 
ject for state aid, 417- 

Empire, British, maintained by 
military force for profits of 
trade, 484 

Employment at wages, beginnings 
of, 164-170: wages system 
economical and equitable, 170- 
181; conditions of, in compact 
centres of industry, 210; qualities 
that promote success and utility 
in, 307, 308; employment in in- 
dustry is the only actual organiza- 
tion of labor, 310; strikes in 
various employments, 328; em- 
ploying class larger in France 
than in England or United 
States, 496 

Employers, losses to by strikes, 
310, 328; in silk industry in 
America, 633; in silk trade in 
England. 739 

Enforced trade, 483-491, 516 ; Ger- 
many has none, 516; in India, 
483 ; in Turkey, 488 ; in Ireland, 
491 ; in China, 536, 553 ; in Ja- 
pan, 553, 685, 686, 689 ; Eng- 
land's coerced trade five times 
greater than all others, 689 

Engine, steam, invention and effect 
of, 680, 681, 684 

England, trade between, and 
France and Belgium, 27 ; rail- 
way travel in, 28 ; displacement 
of labor in other countries by 
machinery in England raises 
wages in, 209 ; possible produc- 
tion of wheat in, 231 ; relative 
wages in, 315 ; it practices not 
free trade but military protec- 
tion, 316 ; intended free coinage 
of silver but failed, 362 ; Bank of 



OENERAL INDEX. 



121 



England producing panics and 
crises for profit, 389 ; govern- 
ment of England free, 404 ; par- 
liamentary, 406 ; responsible, 
406-412 ; England practices mil- 
itary and subsidy protection to 
foreign trade, 431, 432 ; an army- 
made state, 439 ; monopoly of 
opium produQtion, 456 ; crises of 
1825-6 produced by resump- 
tion, 371 ; crisis of 1847 by 
free trade, 374-376 ; crisis of 
1857 produced by bankruptcy in 
United States caused by free 
trade, 376-380 ; crisis of 1866, 
389 ; methylated spirits, 476 ; lo- 
cal taxes in England and Wales, 
476 ; paupers in, 478 ; cost of 
paupers, 478 ; and of army, 478 ; 
prohibition of cultivation of to- 
bacco in, 480 ; highest known 
duties on imports laid by, 481 ; 
governs for profits of trade, 484 ; 
a career and a market, 484, 485 ; 
England gave Bengal a freer trade 
than herself, 487 ; same to Tur- 
key, 489 ; permitted protection 
in Ireland from 1783 to 1800, 
492 ; Act of Union a measure of 
free trade to Ireland and protec- 
tion to England, 493 ; contended 
for free trade in Germanj^ 514 ; 
pyramid of England's industrial 
power, 516 ; her monopoly of 
barbarian markets, 521 ; .her 
forced seizure of Chinese mar- 
kets, 533-535 ; population to 
scjuare mile of, compared with 
China, 545 ; average crop of 
wheat per acre in any county in, 
254 ; relative labor-cost of pro- 
ducing iron in England, Penn- 
sylvania, and France, 573 ; wages 
in England compared Mdth Mas- 
sachusetts, and with United 
States, 581, 582 ; American bal- 
ance of trade against England, 
how adjusted, and net balance 
tending to an increase of coin, 
599-602 ; silk manufacture de- 
stroyed by free trade in silks, 
635-637 ; total . value of manu- 
factures of all kinds, 637 ; sti- 
fling American manufactures 
(Brougham), 642 ; population, 



and iron and steel manufacture 
in, for a century, 646 ; product, 
1883, of iron, steel, and coal, 
650 ; course of, in building up 
her carrying trade, 640-660 ; and 
in inducing Americans to allow 
and aid in the destruction of 
American carrying trade, 640- 
661 ; wool supply of, from 1850 
to 1883, 673 ; consumption of 
wool compared with United 
States, 673 ; brief advantage over 
France in woolen treaty, 674 ; 
Napoleon's war on England in- 
dustrial as well as military, 674 ; 
triumphs in the former, 675 ; 
prices and incidents of cotton 
famine, 690 

English spoliation in India more 
disastrous than Parsee or Mo- 
hammedan conquests, 487 ; in 
Turkey, 488-491 ; in Ireland, 
491 ; early Ent;;land in wool and 
woolens, 668, 669 

Enterprise, defined, 163 ; distin- 
guished from loans to govern- 
ment, 449*, how destroyed 
among the Hindoos, 485 ; pri- 
vate enterprise (Moffat) not 
called on to make the sacri- 
fices required in initiating a new 
industry against certain foreign 
supei-iority, 563 ; Devas on same 
point, 568 ; entrepreneurs, larger 
proportion of, in France, 496 ; 
small in China and India, 623- 
626 ; consequences to labor, 625 ; 
private enterjjrise liable to be 
misapplied where state aid is 
also, 632 

Equality, theories of, in taxation, 
456 ; cqualitjr in industrial claims 
of Irish (491), Hindoo (488), with 
English not recognized, 488-491 ; 
of elTort protected by tariff, 585 

Equilibrium, of industries, Jeffer- 
son on, 598 

Escudo, coin of Chili, 338 

Ethics, relation of economics to,22 ; 
no ethical perfection in govern- 
ment, 440 

Europe, rates of wages in, 581 ; our 
balance of trade against, 600 ; 
how adjusted, and net balance 
in our favor, 601 ; first glass 



V28 



GENERAL INDEX. 



manufacture in, 639 ; the primi- 
tive brown race in, 645 

Evolution, of historical method, 
16 ; scientific, 23 ; of economic 
progress in America, 36 ; of 
House of Commons, 37, 408-411: 
of civilization, 42 ; of society, 
49 ; from communism, 51 ; to 
private wealth, 55 ; of the fam- 
ily, 60 ; of national power, 65 ; 
of a correct definition of value, 
80-92 ; of true theory of value, 
94-102 ; of markets, lOp-106 ; of 
a sound doctrine of prices, 107- 
121 ; of titles, 127 ; of monop- 
oly, 130 ; of laws, 133 ; of rights, 
135, 137, 139 ; of immigration, 
147 ; of railways, 151-160 ; of 
true theory of wages, 163-183 ; 
and of distribution of wealth, 
184-205 ; of capital as a laboring 
agent, 208 ; of a distorted rent 
theory, 239 ; of the true doc- 
trine, 243 ; of cultivated plants, 
275 ; of a true definition of labor, 
282-290 ; of mone,y, 330-336 ; of 
freedom, 359 ; of occupations 
causes forms of government, 
403 ; of responsible and parlia- 
mentary government, 401-412 ; 
of beet sugar, 503-506 ; of Ger- 
man industries, 514-521 ; of Ger- 
man empire, 521-525 ; of silk 
manufacture, 631-637, 638-644 ; 
iron and steel, 644-652 ; English 
and American shipping, 652-664; 
of Canadian manufactures, 664- 
668 ; of wool and woolen indus- 
tries in Europe, Australia and 
America, 668-682 ; dependent in 
United States on the iron and 
steel industry, 677 

Exchange, why men exchange, 91 ; 
in markets how conducted, 99- 
1?,0 ; theory of equivalence in 
exchange not an unerring one, 
109; usually equitable, 110; title 
the source of, 137 ; equivalence 
between employer and employed, 
171-182 ; the surplus of one in- 
dustry depresses its own price, 
but gives value and price to that 
surplus of another for which it 
exclianges, 320, 321 ; money as a 
medium of, begins in treasure, 



329-331 ; bills of, a form of 
credit money at times, 335, 346 ; 
arises out of diversity of produc- 
tion, but not out of inequality in 
producing same things, 513 ; 
equivalence does not dispose of 
the protectionist argument of 
two capitals and two sets of la- 
borers on home product, one on 
imported, 560, 561 ; "exchange 
is exchange " — the formula that 
dispenses with all other knowl- 
edge (Perry), 571 ; of wool for 
cloths between England and Bur- 
gundy, 669 

Excise, 454, 476, 479 •, excise du- 
ties rest on what articles in Eng- 
land, 481 ; none on tobacco, 481; 
on beet sugar in France, 505 

Executive, a unit in all govern- 
ments, 416 ; large control over 
the war power, 417 ; compared 
to a premier, 417 ; or czar, 417 

Expansion in volume of currency, 
385-388 

Expediency of protective tariffs, 
565 

Expenditure, on government, 428 ; 
on armies, 424 ; on education in 
Northern States, 434 ; in local 
government and cities in United 
States, 468 ; on war, navy, In- 
dians, pensions, etc., 468; local 
in England, 476 ; on poor, 478 ; 
on navy and fleet, 478 ; on post- 
office, 480 ; on school and educa- 
tion in France, 497 ; on land and 
sea forces in France, 497 ; on 
debt in France, 497 ; of Ger- 
many and Prussia compared, 
522 ; on schools, 523 

Exports and Imports, 26-28, 34; 
relation to prosperity, 35 ; exces- 
sive exports produce English cri- 
sis in 1857, 377 ; of gold in 1851 
to I860, 386 ; duties on, in China, 
455 ; of manufactured tobacco 
to England, small, 481 ; of leaf 
tobacco, 480 ; tax on in Turkey, 
488 ; of machinery for working 
flax prohibited, 489 ; export du- 
ty on cloth laid by Irish parlia- 
ment, 492 ; of food, raw materi- 
als and manufactures from 
France, 500 ; of beet sugar to 



GENERAL llfDEX. 



729 



England, 505 ; change of exports 
from raw materials to finished 
products in Germany under pro- 
tection, 517 ; value of exports in 
inverse ratio to weight, 518 ; of 
bonds from United States to Ger- 
many, 518 ; of lumber from 
United Slates, 533 ; every pro- 
tected article,. incapable of dom- 
estic production at first, becomes 
capable of export at last, 564 ; 
countries which export food not 
therefore growing ones, 566 ; 
habitual export of food tends 
towards famines in the food pro- 
ducing country, 570 ; the exports 
and imports free traders encour- 
age are those in which both 
countries have the same natural 
facilities and differ only in ante- 
riority, 573 ; protectionists alone 
desire a commerce based on dif- 
ference in natural facilities, 573; 
export in large quantities of an 
article proves a higher or equi- 
valent price abroad to that pre- 
vailing in the country of export. 
591, 592, 609 ; but is not in con- 
flict with a small import from pro- 
ducers locally favored as to near- 
ness, cost of production, etc., 
593 ; in such case the duties col- 
lected on the import are a de- 
duction from a producer's price 
which is not made greater by 
them, 593 ; and are an interna- 
tional tax, 594 ; American export 
of iron and steel wares displac- 
ing those of Birmingham with 
le.'^s than eight years of protection, 
596 ; no more exports desirable 
than will pay for what we lack 
the natural (not acquired) facili- 
ties to produce, 598 ; exports are 
not dependent on our willing- 
ness to import any competing 
product, 599-601 ; exporters 
have essentially nothing to do 
with importers, 601 ; capacity to 
export limited to highly trans- 
portable goods, 602 ; export of 
glass in 1818, 641 ; of machinery 
and artificers from England 
made a felony, 647, 648 ; Amer- 
ican exports and imports, how 



carried, 656 ; export of wool 
from England pi'ohibited for 165 
years, 670; present export of wool- 
en goods, 673 ; large ratio of ex- 
ports of cotton to domestic con- 
sumption in Great Britain, 685 ; 
effect of export trade in cotton 
goods on Great Britain's foreign 
policy, 689 ; of butter, 696 



F. 



Factory, relation of, to the farm, 
320 ; to home manufactures in 
Russia, 527 ; increase of, in Can- 
ada, 667, 668 

Failures, diminish as means of 
payment increase, 221 

Fairs, precede markets and cities, 
100 

Fair trade, Thorold Rogers on, 557 

Fallacies, in Mill, 10-15; in histories 
of political economy, 8; alleged 
in mercantile school, 18, 19 ; 
Cossa as to statistics, 24 ; of ef- 
fect of dispi'oving statistics, 24 ; 
of taking part for the whole as 
to American cost of drinks rela- 
tive to food, 25 ; Springer as to 
tariff duties, 26 ; in Fawcett as 
to effect of cheap bread on crime, 
26 ; as to safety of railway trav- 
el, 29 ; prosperity of free and 
slave States, 33 ; homicides in 
South and federal intervention, 
national prosperity not lueasura- 
ble by foreign trade, 36 ; of rest- 
ing value on labor, 84 ; of Dr. 
Smith's theory of invariable val- 
ue of labor, 85 ; of Karl Marx's 
theory of value, 91 ; of theory 
that speculation raises prices, 
100-110; of getting cheap bread- 
stufl's by importation, 117 ; of 
resting title on labor, 129 ; of 
ideal theories of equal taxation, 
456 ; of schemes of taxation 
which suppress a domestic pro- 
duction yet profess to take no 
money out of the pockets of the 
people except what goes into the 
treasury, 462 ; of the incidence 
of taxation, 462-467 ; of trying 
to inflict ". suffering" or "sacri- 
fice" on the rich by taxes, 463, 



730 



GENERAL INDEX. 



467; of Mr. Mill as to customs du- 
ties being inadequate to produce 
both protection and revenue, 469 ; 
of Adam Smith's notion that cer- 
tainty of taxes causes economy 
in voting them, 474 ; of Bastiat 
concerning scarcity obstacles, 
etc., 506-513 ; of equivalence in 
excliauge argument for free 
trade, 561 ; in George's land con- 
fiscation scheme, 126-129 ; in 
socialistic scheme of railways, 
160; in Dr. Smith's theory, "labor 
causes all values," 167-175 ; in 
theory of declining profits, 191- 
195, 228-230; in theory that 
wealth must be distributed 
equally or injustice is done, 201- 
228 ; in Malthus's theory of pop- 
ulation, 231-235 ; in Ricardo's 
theory of rent, 238-243 ; dear 
labor underworking cheap labor, 
267 ; in Malthus's theory of pop- 
ulation tending to outrun means 
of subsistence, 295-297 ; in the 
distinction between raw mater- 
ials and finished products except 
as to a single industry, 311 ; of 
increasing wages by diminishing 
workers and consumers, 320 ; 
of protected and unprotected 
"classes, 320 ; concerning Gresh- 
am's law, 368, 373 ; of objections 
to balance of trade doctrine 
founded on statistical omissions. 
395 ; of M. Quetelet's ground of 
assuming that crime is not pro- 
portionate to poverty, 442 ; of 
Dr. Smith's giving his own opin- 
ion concerning Colbert and Tur- 
got as that of " the most intelli- 
gent meuin France," 501 ; of com- 
puting the saving on the non-pro- 
duction of a commodity which 
a country lias all the natural fac- 
ilities to produce which are pos- 
sessed by any other, 504 ; of sup- 
posing cheapness controls the 
trade of countries whose trade 
conditions grow out of past wars, 
treaties.and other historic sequen- 
ces, 517; of Chinese census, 538- 
550; of tariff for revenue only, i.e., 
without either protection or sup- 
pression, 564 ; of Perry's argu- 



ment that importing foreign 
goods is not employing foreign 
labor, 572 ; of the "profit argu- 
ment " for free trade, 576, 577 ; 
of Perry's api^licatiou of Ricar- 
do's theory, that dear human 
labor can underwork cheap 
human labor, 267 ; of the error 
that the import and payment of 
duty on a small part of a coun- 
try's supply raises the price of 
the whole domestic supply, 591; 
reductio ad ahsurdum, that it con- 
verts the whole income of Ameri- 
can producers of every kind into 
a collection of protective taxes 
from each other, 592 ; of pi'edic- 
tions by McCulloch that free im- 
portation of foreign silks would 
not destroy English manufact- 
ure, 637; of domestic price of 
every imported or imjjortable 
article being the foreign price 
l^lus the duty, 682 

Family, relation of, in various per- 
iods, 60-65 ; unequal wealth of, 
in England, 273 ; regulation of, 
by government, 431 ; harmony of, 
in China, 552 ; resemblance of 
family unity to national unity, 
575 

Famine, in India, 331 ; causes, ex- 
tent, and number of, in India, 
485 ; in Ireland, 491 ; would re- 
sult in China if opened to rail- 
roads, 536, 547 ; export of food 
continues during famines, 570 ; 
cotton famine in England, 690 

Fanaticism as a social waste, 446, 
447 

Fancy articles, export of, 610 ; im- 
ports of and revenue from, 613 

Farmers, cost of meat among, 25 ; 
ejectment of tenant farmers in 
Ireland on repeal of protection 
to corn, 26 ; in Persia, 51 ; ryots 
of India affected by loss of man- 
ufactures, 67 ; small and large 
farms, 73 ; prices of crops af- 
fected by scarcity, 96 ; relative 
power of consumption and pro- 
duction, 97 ; how affected by 
trade in grain in great boards 
and produce exchanges, 103, 112; 
profit made by them on short 



GENERAL INDEX, 



731 



crop of 1881, pea.s and oats, 107 ; 
production of fanners deter- 
mined by market prices, 108 ; 
prices not determined by labor 
or cost of production, 108 ; 
products of as alTected by sea- 
sons, wars, currency, protection, 
etc., 110-120 ; decline of acreage 
planted by farmers in Great 
Britain under free trade in corn, 
118-120 ; protits of farmers in 
England, 178 ; inequalitj^ of 
conditions among, equalized by 
migration, 214 ; farming less 
favorable to the poor than city 
life, 219 ; economy of Dakota 
and bonanza farms, 219 ; Dr. 
Smith on farm rents, 288 ; true 
cause of rent, 238, 242, 243; 
how rent and transportation 
balance each other as taxes on 
farmers, 247-253 ; how many 
are tenant farmers in United 
States, 267 ; capitals in farms, 
267 ; farmers being elim- 
inated in Ireland, 274 ; decline 
of crops and animals after pro- 
tection withdrawn, 275 ; sim- 
plest organization of farm labor 
is working on shares, 311 ; num- 
ber engaged in, in United States, 
320 ; farmers of the revenue in 
Asia and Africa, 453 ; farmers of 
India, how destroyed, 485 ; of 
Turkey, how taxed, 488 ; com- 
petition between farmers and its 
effects, 513 ; can have no trade 
with competing farmers, 513 ; 
in Prussia advance in tillage, 
520 ; employed by the commune 
(mir) in Russia 526 ; farmers' 
prices and import duties, 591 ; 
butter, potatoes, grain, and flour 
not raised in price in United 
States by duties, 501 ; nor wool, 
salt, coal, and lumber, 591, 592 ; 
farmers of America are not the 
promoters of any free trade agi- 
tation whatever — importers not 
authorized to speak in their 
name, 604, 605 ; share of duties 
paid by farmers, according to 
Thos. G. Shearman, less than 
from 1 to 3 per cent, of the total, 
612 ; farmers of Great Britain 



sacrificed to the manufacturers, 
676 ; products of, exported, 
610 ; yet a revenue derived from 
their importation, 613 ; rates of 
duty on farmers products, 610 

Farming the revenues, in China, 
453 ; Asia and Africa, 453 ; in 
Rome, 454 

Federal union in United States 
and Germany, how formed, 514 

Fertility of man relatively to ani- 
mals and plants, 231-235 ; as an 
element in rent, 238-242; de- 
cline of, in certain countries and 
advance in others, 254-262 ; 
fertility changing to desert in 
Turkey through free trade and 
bad government, 490 ; how in- 
duced in Prussia, 520 

" Fiat " (see Money) 

Fig tree, taxed, but imports free 
in Turkey, 489 

Finance of United States, in 1861 
to 1875, 352-355, 386 

Finished products, value of ex- 
porting, rather than raw mate- 
rials, 322 

Fire-arms, wages in manufacture 
of, 581 ; superiority of Ameri- 
cans in, 596 

Fire-wood, revenue from, 586 

Fisheries, taxes on, 454 ; English 
statutes to protect, 555 

Fish, exports and imports of and 
revenue from, 610, 613 ; con- 
sumer does not pay the duty on, 
615 

Flannels, protection to, 383 

Flax, duties on, 383 ; in Russia, 
527 ; wages in flax manufac- 
ture in Massacliusetts and Great 
Britain, 582 ; fiber compared 
with M'ool, 672 

Florence, woolen manufacture, 
669 

Florin, 338 ; in England, 339 

Food, rate of production of, 232 ; 
evolution of sources of food, 
275-280 ; no food fund in nature, 
295 ; fallacies of the fear of man 
outrunning means of subsis- 
tence, 296; effect of free coi-n 
on farmers of Italy, 317 ; con- 
sumer makes price, 320 ; of Hin- 
doos, 486 ; imports and export!? 



Y32 



GENERAL INDEX. 



of, in France, 500 ; from Ger- 
many, 515, 520 ; in cotton goods, 
520 ; export of, in raw, ceases 
when embodied in linislied prod- 
ucts, 520 ; countries exporting 
food are not necessarily growing 
countries, 566 ; dependence of a 
country on foreign countries for 
food, 570 ; excess of food in a 
food-exporting country no guar- 
anty tliat its people will not 
starve, 570 ; wages in food prep- 
aration in Massachusetts and 
Great Britain, 582 ; strikes and 
losses in, from 1881 to 1887, 328 ; 
butter in United States, effect of 
duty on price, 586 

Foreigner, how made to contrib- 
ute revenue under protective 
duties (Sidgwick), 565 ; depen- 
dence on, discussed by McCul- 
locli and Devas, 570 ; on what 
articles foreigner pays the duty, 
586 

Foreign salt, lessened consump- 
tion of, in United States, 693 ; 
price, 697 

Foreign ships, carry our imports 
and exports (659), because of 
the total withdrawal of protec- 
tion from American carriers, 
642, 653 ; causes, 659, 660 

Foreign trade, protected by Great 
Britain effectively, 316 ; effects 
of in United States, 381-385 ; 
how classified in France, 500 ; 
limitations and restrictions hav- 
ing other than a protective de- 
sign not to be charged to the 
protectionist principle, 500, 501 ; 
limited relatively to home trade 
by cost of transportation to arti- 
cles combining small bulk and 
easy portability with large value, 
600 ; restricted by the small 
number of products it can 
take, 602 ; involves military 
aggression and a universal 
and incessant drumbeat, 685, 
686 

Forests, waste of and extent of in 
United States, 148 ; taxes oii 
in Roman empire, 454 ; wo- 
men working in, in Germany, 
525 



Forfeiture of foreign vessels tak- 
ing part in coasting trade, 652 

Franc, unit of France, Belgium, 
and Switzerland, 338 

France, silk trade of, 26 ; travel in, 
28 ; military statistics under 
Napoleon III. , 30 ; marriage in, 
30 , cost of wars in, 70 ; value of 
agricultural products of, 230 ; 
relative wages, 315 ; coinage of, 
from 1851 to 1856, 380, 386; 
monetary unit of, 338 ; change 
in social forces, 403 ; French 
government responsible, 407 ; 
as a republic, 416, mayors and 
police prefects appointed, 416 ; 
expenditure on army in, 438 ; 
M. Quetelet on crime in, 442 ; 
' comparative loss of life by indi- 
vidual crime and social strug- 
gles, 446 ; credit, how main- 
tained, 448 ; payment of German 
indemnity by, 450 ; producing 
tobacco, 456 ; but permitting 
subjects also to produce, 481 ; 
employers numerous in, 496 ; 
relative to Great Britain, 497 ; 
land-owners numerous, 497 ; 
value of wine manufacture, 497; 
of all manufactures, 497 ; of 
foreign trade, 497 ; government 
centralized, 497 ; protective 
duties in, 498 ; free and dutiable 
articles, 499 ; France and protec- 
tion discussed by Adam Smith, 
500-503; beet sugar, 503-506; 
her military relations to Ger- 
many, 515 ; proportion of land 
cultivated to population, 546 ; 
labor cost of making iron com- 
pared with that in England and 
Pennsylvania, 573 ; unity of, 
630 ; under Colbert introduces 
manufacture of china, glass, 
carpets, and tapestry, 639 ; pro- 
duction of iron, steel, and coal 
in, 650; lines of steamers sus- 
tained by, 658 ; merino wools of, 
672, Mauschump, wool of, 673;- 
Avool supply of, 673 ; beginning 
of the wool industry under Col- 
bert, 673 ; brief mistake of 
French statesmen in 1786 con- 
cerning woolens, 674 : triumph 
of Napoleon's protective policy 



GENERAL INDEX. 



'733 



in Europe generally since 1816, 
675 ; England's trade in cotton 
goods with, 089 

Frankfort, ol4, 515 

Free coinage, 341, 3-42, 358-369; 
defined, 361 

Freedom, relation of prices to, 
121 ; diminislies in compact 
centres, M'itb increase in power, 
but can still be had on the out- 
skirts, with relaxing power, 210; 
capital emancipates labor, 212 ; 
how, 213 ; freedom of speech, 
when the intent of speech is to 
promote crime, 307 ; relation of 
money to, 329 ; created by the 
extra dollar (Phillips) after satis- 
fying wants, 583 

Free list, of England, 482 ; of India, 
487 ; of Turkey, 488 ; of Ireland, 
493 ; of France,498,499; coffee on, 
in United States, not in England, 
600 ; American free list covers 
six-sevenths of all articles not 
producible in America, 601 ; but 
importing them free has no ten- 
dency to increase our exports to 
the countries which produce 
them, 601 ; we sell them only a 
fifth as much as we buy from 
them, 601 

" Free ships," as a pretended 
American policy, a fraud, 661, 
662 ; the counterpart of the Tro- 
jan Horse, 662 

Free trade, associated with the 
Laissez faire doctrine, 15 ; mak- 
ing one world's market would 
impair wages in high standard 
countries, 315 ; how under the 
name free trade protection may 
be practiced, 316 ; the argument 
that " all trade is barter" vindi- 
dates protection, 322 ; (rue free 
trade measured hy freedom in 
paying for what we buy with 
wliat we have to buy with, 322 ; 
crises produced by free trade 
policy in England in 1847-8, and 
United States in 1854-7, in 
1819-1837, 374-381; tends to 
over-tradina:, 377 ; produces 
crisis of 1837, 382 ; and of 1857, 
385 ; imports increase and 
revenue relatively to imports 



fall under free trade, 469-472 ; 
how far British tariff" is a free 
trade scheme, 482 ; internal trade 
of England less free than in 
United States, 482, 483 ; effects 
of forcing English trade on 
India, 483-488 ; free list in 
France, 499 ; free trade puts 
high duties on imports not ]M'o- 
ducible in the country laving the 
duty, 480, 508 ; free trade soon 
brings dearness and scarcity, 
509 ; wdierever the domestic sup- 
ply is the only one adequate to 
the demand, 510; list of Ger- 
many, at first an advocate of free 
iTade, 514 ; how changed, 514 ; 
free trade theory covers coerced 
trade in practice, 553 ; exempli- 
fied in China, 534 ; and Japan, 
553, 554 ; lowest duties known 
save in Turkey, 533 ; exceptions 
to free trade (Mill), 557 ; an argu- 
ment of protectionists that no 
free trader can refute except by 
reftising to state it, 560 ; free 
trade in fact only a criticism, not 
a policy, 602 ; while it professes 
to let industries alone in the 
country adopting it, it really 
cloaks war on all nations, 6, '8 ; 
its tendencies disintegrating, 
629, 630 ; displacement of labor 
by, in silk manufacture in Eng- 
land, 635 ; American ocean ves- 
sels left to free competition with 
foreign since 1816, 642, 653; 
does not kill until foreign ship- 
builders can build a cheaper 
ship, 656 ; then it proves fatal, 
656 ; free trade pressed but de- 
clined in all British colonies, 
664, 668 ; absolute free trade in 
wool and woolens kills the wool 
and woolen industries of Poi'tu- 
gal and Brazil, 670 ; short career 
of mischief in France in 1780-93, 
674 ; free trade in United States 
transfers American ships to Eng- 
land, and free trade in England 
transfers millions of farmers, 
wool-growers, and silk-makers 
to United States, 682 ; free trade 
the corner-stone of the Con- 
federate rebellion, 687, 698 ; in 



734 



GENERAL INDEX. 



quinine, 693 ; free trade is the 
creed of untlirift in the United 
States, and derives its cliief sup- 
port from the thriftless classes, 
099 ; the uniform sequence of 
prosperity after protection caus- 
es denials that sequence implies 
causation, post hoc, etc., 703-707 

Free traders, irritable and super- 
cilious tone of,' 555-558 : their 
error of style arising from 
bumptious intolerance combined 
with limited research, 558 ; 
Jevons and Perry do not meet 
the "one and two capitals" 
point, 560, 572 ; when free 
traders are not unpatriotic 
(Devas), 570; can not claim the 
"diversity of natural gifts" 
argument, as it belongs wholly 
to the protectionists, 572-573 ; 
the free trade contention is for 
free admission of competing 
products, and high duties on 
products dependent on unlike 
natural conditions, 573 ; Mr. 
Shearman contends that manu- 
facturers in United States pay 
from 97 to 99 per cent of tariff 
duties, 611-612 ; downfall of 
American ocean carrying trade 
due to free traders' efforts to get 
cheap iron and steel by importa- 
tion while England was getting 
it by protection, 648-650 

Freight earnings must be added to 
exports of carrying nations to 
state balance of trade correctly, 
395 ; of English ships, 663 ; 
how obtained, 659, 663 

French school of economists, 
Bastiat, 8, 42, 234 ; Say, 9 ; Lh- 
Vasseur, 80 ; demand the cause 
of labor, Boisguillebert, 82 ; 
Condillac, 82 ; Cournot on mar- 
kets, 100; Dupin, 70; Cordier, 
70 ; Wolowski, 78 ; Godard, 
189; Fontenay, 242; DeCandolle, 
275-280; Editor of Le Devoir, 
313 ; M. Godin, 313 ; Le Play, 
331; Baron de Rothschild, 364; 
Cernuschi, 373 ; Quetelet, 441- 
445; Bastiat, 506, 514; Colbert 
and Turgot, 500, 503, 639, 650, 
673; Napoleon, 673, 675 



Fruits, exports of, 610 ; imports of 

and revenue from, 613 
Fuel, in making iron, 645 
Furniture, wages in manufacture 

of in Massachusetts and Great 

Britain, 582 ; strikes in, 328 ; 

revenue from in United States 

paid by foreign producers, 586 
Furs, exports of. 610 ; imports of 

and revenue from, 613 
Futures, dealing in on boards of 

trade; economic aspects of, 104 

G. 

Gas-fittings, export of, 596, 610 

Gaul, taxes in, 454 

Genoa, woolen industry, 669 

Georgia, silk raising in, 631, 632 ; 
present production of iron, 646 ; 
Robert Toombs of Georgia helps 
effectively to destroy American 
merchant marine, 657, 658 ; and 
earns contempt of British free 
traders by his subserviency, 658 ; 
woolen coat made in one day in, 
671 

German economists, Roscher, 24, 
43, 50, 64, 122, 178, 240, 380 ; 
Karl Marx, on value, 88-94, 184, 
189, 240 ; Soetbeer, 868, 366; H. 
H. Gossen, 94; Heine, Heeren, 
Hegewisch, Niebuhr, 139; Griln- 
lund, 212, 176, 179, 306; List, 
514-530 

Germans, subscribed to French 
indemnity, 450 ; indemnify the 
empire for its absolutism, 524 

Germany, accidents in mines, 
82 ; fairs in, 102 ; value of 
agricultural product, 230 ; 
relative wages in, 315 ; experi- 
ence in changing from silver to 
gold, 362-363 ; monetary unit, 
338 ; emperor's power, 406 
parliament advisory, 40 > 
expenditure on army in, 438 
empire founded by its army, 
439 ; production and export of 
beet sugar in, 503-506 ; national 
unity and German empire pro- 
moted by protection to German 
industries, 514-520: trade of with 
England prior to 1827, 515 ; in 
raw materials kept Germany 



aENEHAL INDEX. 



iSD 



poor, ,'515 ; its war "wilh Austria 
in 1866-7 caused no debt, 516 ; 
war of 1870 with France, 516 ; 
industrial conditions of, 516 ; no 
enforced trade, 516 : Germany 
leads in specified particulars, 
521 ; causes of, 521 ; history of 
evolution of German Empire 
industrially, 514^521; politically, 
521-525 ; heterogeneity and dis- 
union of, under free foreign 
trade, 521, 522 ; revenues of, 
522 ; rates of wages in, 581 ; 
American balance of trade 
against, 600 ; unity of Germany 
a result of protection, 630 ; 
superseding English in silk 
manufacture, 636 ; product of 
iron, steel, and coal in 1883, 650 

German Empire, monetary unit of, 
338 ; political evolution of, 521- 
525 ; industrial growth of, 514- 
521 ; vindicated in parliament, 
524 

Gia'-mill, invention of, and effect, 
681 

Gimlets, export of, 596 

Gin, Whitney's cotton, effect of 
invention, and nature of, 686 

Ginseng, export of, 610 

Glass, trade in between England 
and Belgium, 27 ; duties on, 
383 ; in France, 498, 502, 503 ; 
German, 519 ; Victoria protects, 
530 ; beginning manufacture of 
in Pittsburg, 578 ; rates of wages 
in glass manufacture in America 
and Europe, 581 ; England pro- 
tects her own glass, but with- 
draws protection from Irish 
glass, 493 ; exports of, 610 ; im- 
ports of and revenue from, 613 ; 
history of manufacture of, in 
Egypt, Europe, and United 
States, 638-644 ; begun under 
Colbert's auspices in France, 639; 
in Scotland, England- and 
American colonies, 639 ; Alexan- 
ander Hamilton's report on , 639 ; 
white green. Hint, German, 
crown, and cut glass, 640,641; 
total product of, from 1824 to 
date, 643, 644 

Glue, revenue paid by foreign 
producers on, 586; export of, 610 



Gold, tie between government 
credit and gold in 1861-5, 221 ; 
as an ornament, 331 ; followed 
silver in England, 334 ; the cur- 
rency of capital and large invest- 
ments in reproductive wealth, 
339 ; quantity in use as money, 
344 ; Adam Smith on relati\'e 
values of gold and silver, 345 ; 
rate of production of, relatively 
to silver, 366, 367 ; how affected 
by drain to India, 373; can not 
afford to pay debts in gold when 
it removes an implement of 
business, 383; in arts, 383; gold 
penny, 339 

Gourde, monetarj^ unit of Hayti, 
value, 338 

Government, on what qualities in, 
growth of wealth depends, 
68; origin of, 131-135; 
changes in, 133 ; debts of, 352 ; 
is involuntary, instinctive, and 
beyond the collective power of 
society to dispense with, 398- 
399 ; among savages is tribal, 
402 ; gi'ows out of their economic 
condition, as being without capi- 
tal, 402 ; if economic conditions 
are unequal becomes aristocratic, 
402 ; climate, 402 ; occupations 
mould the form of, 403 ; remains 
an affair of party, 404 ; despotic 
when, 404 ; free, 404 ; judicial 
department most coercive, 416 ; 
the official class slightly larger 
in republics than in monarchies, 
423 ; temporal and spiritual and 
secular, 428 ; general and local, 
429 ; functions of local are 
largely economic, 429, 430 ; in 
all employment, 432 ; right to 
govern, 440 ; functions of ex- 
pand, 455 ; its share of produc- 
tion, 454-455 ; practice of, some- 
times better than theories, 457- 
460; local, in England, 477; 
British Empire governed for j^ro- 
fits and not for revenue, 484 ; 
little local government in France, 
497 ; of William and Bismarck 
approved, 514-525 ; taxes on 
liquors identify government with 
traffic in certain ways, 527 ; 
workings of Ilussian govern- 



^36 



(GENERAL INDEX. 



mentasto emancipation, resump- 
tion, and paupers, 520, 521 ; of 
China riglit in excluding forces 
tending to disruption of Chinese 
internal trade, 547; is the sum of 
all intrinsically profitless and 
socially necessary industries, 
700, 701 
Grains, duties on imports of, from 

Canada, 591 
Graziers, taxed in Turkey, 488 
Great Britain, crime in, 33 ; origin 
of its House of Commons, 37 ; 
commons and private lands, 139; 
earnings of entire people, 176 ; 
value of agricultural products, 
230 ; total gold coinage of, in 
1851 to 1856, 386; monetary 
unit, pound sterling, value of, 
338 ; extent of deposits in private 
banks, of, 389; total bank depos- 
its of, 389; culture of the nobility 
and land-owning gentry in, 406 ; 
history of government in, 408- 
412 ; credit, how maintained, 
448 ; local taxation in, 476-479 ; 
general taxation in, 479-483 ; 
tyranny in prohibiting cultiva- 
tion of tobacco, 480 ; derives no 
revenue from outside dominions 
except profits of trade, 484 ; rates 
of wages, blacksmith and iron- 
puddlers, in 1867, 511; change in 
trade of, with Germany, pro- 
duced by protection in Germany, 
515 ; relation of, to her colonies, 
530-533 ; unable to prevent their 
adoption of protective policies, 
530-533; course of, toward China 
and Japan, 533-554 ; British 
protective laws, 555; and what 
occupations they protected, 
555 ; rates of wages in, compared 
with United States and Mas- 
sachusetts, 581-582 ; total value 
of British manufactures, 637 ; 
small product of iron and steel a 
century ago, 646 ; and imports, 
646; population of in 1788, 646 ; 
Great Britain indebted to her 
protection to iron and steel and 
ship-building for lier carrying 
trade, 648, 649 ; product (1883) 
of iron, steel, and coal, 650 ; pro- 
duct of pig iron from 1860 to 1883, 



651; how Great Britain " fesds 
the main arteries'of British com- 
merce," 657 ; but can not influ- 
ence the tariff policies of her 
colonies, 664 ; British legislation 
always animated by a protective 
motive, 675, 676 ; but it was a 
protection to the stronger, at the 
cost of the weaker class, 670 

Greeks, ignorant of use of sugar, 
beer, cultivated strawberry, 
buckwheat, maize, 275-279 ; 
allotments of land by Lycurgus, 
138; economic conditions of, 
gave form to governments, 402 

Greece, ownership of land in, 23 ; 
family relation in, 61 ; monetary 
unit of, 339 ; earliest money of, 
331, 333 ; government of, 407; al- 
leged bankruptcy of modern,448; 
early iron and steel in Homer, 
Schliemann, Gladstone, and Gold- 
ziher, 645 ; wool culture and 
sheep in, 668 

Gresham's law, 368 

Groat, 339 

Guesswork, as a basis of i^roof, 
683 

Gunpowder, export of, 610 ; im- 
port and revenue, 613 

Gypsum, revenue paid by im- 
porters, 586 



Hair, export, of, 610 ; import and 
revenue, 613 

Hamburg, 523 

Hammered coins, 340 

Hand-made goods in India super- 
seded by English machine-made, 
effects of, 66 

Hanover, for free trade in 1818, 
514, 515, 522 

Hard times, 372, 374-376, 381 ; in- 
crease of imports leading to, 
384, 385 ; of 1854-7, 385 

Hardware, wages in, inUnitedStates 
and Europe, 581 ; effect of im- 
ports of hardware from England 
into India, 66, 67 ; prices of san- 
itary hardware in New York, 
how reduced by American com- 
petition under protection, 621, 
623 



GENERAL INDEX. 



137 



Hatchets, English aud American, 
prices of, 590 

Hats, wages in United States and 
Great Britain, 582 ; export, 610 ; 
imports and revenue, 613 

Havre (American) steamer line de- 
stroyed, 657 

Hay, rakes, export of, 596; export 
of hay, 610 ; import and reve- 
nue, 613 ; importer pays duty, 
615 

Hayti, monetary unit of, 338 

Hebrews, taxes among, 453 ; di- 
vision and allotment of land, 
138 ; year of jubilee not an ex- 
ample of communism or state 
ownership, 138 

Hemp, under tariff of 1816-1834r- 
1828 in Russia, 527 ; exports 
from United States, 610 ; im- 
ports and revenue, 613 ; com- 
pared with wool, 672 

Hesse, 515 

Hides and skins, export of, 610 ; 
import of and revenue from, 
613 

High duties, England on tobacco, 
480 ; free trade policy lays on 
tropical and non-competing 
products, 573 

Highways, 430, 432 

Hindoos, 486, 516 (see India) 

Hinges, English and American 
prici'S of, 590 

Historical school, 13; notconfined 
to opinion, 17 ; limitations on, 
20 ; importance of historical 
method on questions of revenue 
and protection, 469 

Hoard, can not be affirmed of en- 
joyable wealth, 205 ; onljr of re- 
productive or social, 207 ; oppo- 
site of capital, 211 ; in stockings, 
224 ; rich have no hoard, 224, 
304-307 ; silver ornamenlsin In- 
dia as refuge against famine, 
331 

Hoes, export of, 596 

Holland, government of, 407 ; 
credit, 448 ; American balance 
of trade against, 599 

Home, markets, 381-382 ; home 
better secured in Russia than 
Ireland, 430 

Jlome trade, 512, 560, 567 ; takes 



more products than foreign, 602; 

and is freer as to means of pay- 
ments, 604 
Home production, employs tAvo 

capitals and two sets of laborers 

where imported employs one, 

572 
Hops, revenue paid by foreign 

producers, 586 ; export of, 610 ; 

imports of and revenue from, 

613 
Horses, excise duties on, 481 
Horse-nails, export of, 596 
Hosiery, duties on, in 1828, 383 ; 

success of foreign, 691 
House tax in England, 482 
Hundred rates, 477 
Hungarj'-, food exported during 

famine, 570 



I. 



Idleness, when compulsory, 511, 
513, 569 

Identity, not diversity of natural 
gifts between United States, 
England, France, Germany, etc., 
573 

Illinois, land system in, 142; 
Railroads, aid to, 155; railway 
earnings and division of, be- 
tween capital and labor, 173, 
311; transportation from, 221; 
corn, production in, 252; farm 
products in, 261; tenant farms 
in, 269; taxes in, 468; manu- 
factures of, 664, 666 

Inunigratiou, 145 ; past and future, 
145-146 ; chart of, 147 ; money 
brought by, 148 ; assorted and 
exclusion of, 148 ; exclusion of, 
as a measure to promote wages, 
320, 321 ; change in consump- 
tion by, 321 ; protection to Amer- 
ican industries favorable to, 473; 
from Switzerland into Ireland 
during protection, 492 ; of Chi- 
nese into other countries coex- 
tensive with destruction of au- 
tonomy and industries in their 
own, 536 ; figures of Chinese, 
548; compared with European, 
548 ; total immigration from 
1860 to 1883 shown'"by tables and 
chart, 651 



738 



QSNiSRAL mBlit. 



Impeacliment, 409 

Implements, agricultural, in Unit- 
ed States, 263-267 ; Germany, 
525 ; China, 547 ; wages in man- 
ufacture of, in United States and 
Europe, 581 ; American articles 
supplanting those of Birming- 
ham in foreign markets, 596 ; 
protected but exported, 610 ; 
prehistoric, for defense, 644 

Imports, duties on Roman, 454; in 
United States from 1821 to 1881, 
average amount of, and revenue 
produced, 469-472; gold dis- 
coveries increase, 470; quantity 
of imports reouired under low 
duties to produce as much re- 
venue as high, 471 ; chart of im- 
ports and revenue from 1820 
to 1860, 471; of food, raw 
materials and manufactures in 
France, 500; change in Germany 
from finished products to raw 
materials, 517; of lumber into 
United States, 532; increase ten- 
fold of imports of silk into Eng- 
land under free trade in silks, 
636; of wool and woolens com- 
pared with domestic product, 
677-678 

Importations, excessive produce 
commercial crises, 374, 376, 382, 
385, 388; importing English iron, 
is importing English crops con- 
densed into iron, 579; it dis- 
places American crops to the 
value of the iron imported, 579; 
importation, where domestic 
production is adequate, dis- 
places it, but does not increase 
supply nor lower prices (silks), 
635, 636 

Importers and foreign manufac- 
turers inspire the free trade 
criticism, 604, 605; in Jefferson's 
period wanted duty taken off 
salt, 640; importers of competing 
goods, interests not identical with 
those of American labor, 642 

Improvements, 455 

Incidence of taxes, 459; a final 
subtlety of slight practical value, 
460; can not be known if " con- 
venience" is consulted, 461-407; 
of import duties on products 



amply supplied at home, 609- 
623; incidence of tariff' duties on 
iron and steel, 647; on wool and 
woolens, 678-680 

India, former wealth of, and present 
poverty, 66; relative wages in, 
315; influence of drain of silver 
to, over its ratio of value to gold, 
346; silver standard, monetary 
unit of, 338; value in annas, 338; 
ancient taxes in, 453; land tax 
or rent, 455; tax on salt, 455; 
economic effects of British as- 
cendency in, 483-488; revenue 
paid by, 485; salaries of English 
and native ofticers, 485; India 
was compelled to take free trade 
in silks and cottons while Eng- 
land kept protection, 487; Eng- 
land vetoes iDrotective legislation 
in, 533; food exported during 
famine, 570; England's trade in 
cotton goods with, 689 

India-rubber goods, exjDorts, 610; 
imports and revenue, 613 

Indiana, land system in, 142; 
fertility in, 242; corn produc- 
tion in, 252; farm products in, 
261; tenant farmers in, 269; in 
silk raising mania of 1826 to 
1839, 632; in plate glass, 644; 
economy of protection to its 
manufactures against Eastern 
(Sidgwick), 562, 665, 666 

Indians, 23, 49-54, 645 

Indirect taxes on luxuries com- 
mended by Smith, 461 

Individual debts in United States, 
448 

Industry, incentives to, 62; begins 
how, 162-166; distinction be- 
tween it and labor, 163; how 
stimulated by abundant means 
of payment, 221; annual pro- 
duct of, in United States, 224; 
comprehends all economic effort, 
290; all new industries unprofit- 
able at first, 318; women in, 325, 
328, 382; crises in United States, 
382; industries more affected 
usually by local than general 
government, 430; failure in, the 
chief cause of crime, 441; in- 
dustry a surer source of well- 
being than charity, 446; effect of 



(GENERAL INDEX. 



739 



public debt, 448; prohiltitioii of 
an industry as a nu'aus to pi-e- 
vent a tax from protecting it, 
461; subversion of industries in 
India, 485; transfer of industries 
from Turkc}' to England, 490; 
relation of legislation to industry 
in France, 487-513; in Germany, 
514-525; home industry in hemp, 
flax, linen, and woolen in Eus- 
sia, 527; relation of government 
to, 455; Adam Smith on pro- 
tection to, 555; Mill on pro- 
tection as a means to naturalize 
a foreign industry, 556; not an 
advantage to a country to turn 
all its energj^ into one channel, 
567; inducements to organize a 
varied home industry (Moflat), 
567; new industries require 
shelter, Devas on, 568, 577, 578; 
how protection aids, 609-629; silk 
industry in England and United 
States, 631-637; glass industry in 
United States, 638-644; iron and 
steel, 644-652; ships and ship 
building, 652-663 ; carrying 
trade, 663; wools and woolens, 
664-670 ; cotton and cotton 
goods, 670-680 
Industrial independence, 671 
Industrial war, between England 
and India, 66-67; between Ger- 
many, France, United States, 
and England in silk manufac- 
ture, 631-638; between England 
and United States in silks, 635- 
637; in manufactures. 642; 
Brougham on, 642; in iron 
and steel, 646-647; England's 
industrial war against American 
commercial marine succeeds, 
640-666; through "free trade" 
reciprocity, 655; subsidies, 659; 
piracy, 663; England scores a 
short free-trade blow at France, 
674; France triumphs under 
Napoleon, 674; whose views 
rule Europe, 675 
Incomes of people of all nations 
(]\Iulhall), 36; in England, 176; 
growtli of, 273; incomes as a 
basis of taxation, 450; income; 
ta.c, 479-482; total income of 
railways reporting in Illinois, 



173-311; of English railways, 
174; of manufactures in United 
States, 176-312; of English 
people compared with Hindoos, 
66; in salt manufacture, 312; 
textile fabrics, 312; iron and 
steel, 312; meat packing, 312; 
woolen goods, 312; lumber, 
leather, 312 ; ship-building, 313; 
silk manufacture, 313; tax on 
incomes called class tax in part 
in Germany, 522; average in- 
come of Hindoos, 486 

Inequalities, and crime, 442 ; in 
taxation, 463 

Inflation, as a cause of crises, 
385 ; produced hy war debts, 
392, 394 ; loans to government 
are inflation, 450 

Inquisition in France, 502, 550 

Insolvencj', of individuals abated 
by issues of government money, 
221 ; of nations may follow from 
owing abroad, 377 ; ma}' be pro- 
duced by excess of imports, 382 ; 
and even of gold, 385 ; du ring- 
free trade periods, 377, 385 ; 
but not in protective, 389 ; of 
nations, 448 

Instruments, musical, 519 ; pro- 
tected in Victoria, 530 ; mathe- 
matical and musical in United 
States export of, 610 ; import of, 
and revenue from, 613 

Interest, pecuniary, the aggregate 
of all private interests is the 
public, 36-40 ; per cent of, less- 
ens as fund increases, 178 ; ratio 
of to returns of industry, 178 ; 
equal to one half of average rate 
of profit, 193 ; ratio of interest to 
rent, 194 ; rate of, is in inverse 
ratio to amount of capital of 
lender, 222 ; interest defined, 
238 ; may be high where pro- 
duction is slow, 261 ; on loans 
must be added to exports in stat- 
ing balance of trade of monej'- 
leudiug nations, 395 ; on United 
State debt in 1883, 468 ; interest 
and wages may both be high if 
product of industry is great, 
579-581 

Internal improvements in United 
States, 150-158, 220 ; in Canada, 



HO 



GENERAL INDEX. 



531 ; in United States Jefferson 
thought federal government 
should be empowered to make 
rather than disturb the tariff on 
account of a surplus, 640 

Internal revenue, or taxes, in Rome 
and Gaul, 454 ; in United States, 
amount of, 468, 475 ; taxes on 
"whiskey and tobacco popular in 
United States 475 ; difficulty of 
repealing in United States, 
475 ; extent of taxes on 
internal commerce in Eng- 
land, 482, 483 ; internal taxes 
heavy in Turkey, 488 ; inter- 
nal trade freer in England 
than in France prior to 1793, 
501 ; but not between England 
and Ireland, 501 ; internal trade 
most free where protection from 
foreign trade is best assured, 
514 ; on liquors in United States 
and in Russia make the manu- 
facturers of liquors collectors of 
revenue in effect, 527 

International competition, 319 ; 
payments made by export of 
debt, 353-359 ; crisis in one 
country spreads to others, 377 ; 
can be taxed 457, 607, 630 ; in 
silks, 633-637 ; in glass, 644 ; in 
iron and steel, 646 ; in prices of 
iron and steel, 647 ; in shipping 
and ocean carrying trade, 652- 
664 ; dispersion of industries 
among nations better than con- 
centrating them into one, 674, 
675 

International contempt, shown by 
eminent English free traders 
toward their American dupes, 
657,658 

International iniquity, 446, 483- 
487, 488-490, 491-495, 533-548 

International taxation, 457 ; 
through profits of a conquered 
and enforced trade in India, 
Turkey, and Ireland, 483-491 ; 
China's struggle to avoid, 540- 
548 ; how much Canada pays in, 
593, 594, 615-617 

International values,450; and trade, 
Mill's theory of, 10-14 ; opposed 
by Carey, 16 

Invasion, to compel " free trade," 



China, 534 ; Japan, 553 ; of silk 
industry of England and des- 
truction by free trade in silks, 
635-637 

Inventions, state sphere concern- 
ing, 431 ; inventive spirit crushed 
by irremovable poverty, 597 ; 
most of the great inventions of 
England made in strongly pro- 
tected industries and periods, 
654, 648, 649, 680, 681, 684, 685 ; 
few of moment since 1846, 596, 
597 ; London Times on, 596 ; 
American invention of pressed 
glass, 643 ; in France during 
protective periods, 674, 675 ; 
rapidity of in England in pro- 
tective periods, 680, 681 

Iowa, land sj'-stem in, 142; cost of 
transportation from, compared 
with English farm rents as a tax 
on farmers, 250, 251; corn pro- 
duction in, 252; value of lands, 
257; farm products in, 261; 
tenant farms, 269; banking in, 
352; woolen manufactures in, 
666 

Ireland, relation of crime to pov- 
erty in, 33 : population being 
eliminated, 274-275 ; home not 
secured by its local system. 430; 
effect of prohibition of tobacco 
raising in, 461, 462; famine of 
1846-1849 in, and effect on 
American exports, 470; taxes in, 
476; prohibition of culture of 
tobacco in, 481; never has had 
protection to industry from a 
British parliament, 491; English 
efforts to suppress manufactures 
in, 492-495; how it throve under 
home-rule protective policy from 
1783 to 1800, 492; subversion of 
her industries under Act of Union, 
494; free corn in 1846 reduces 
her acreage to corn one-half, 
559; prohibitfHl from producing 
tobacco in order that duty on 
may not protect, 562; food ex- 
ported in famine, 570 ; ovir bal- 
ance of trade with, 599-601 

Iron, capacity of one man to pro- 
duce, 220; division of product 
in iron and steel manufacture in 
United States, 312; iron used as 



GE^EUAL INDEX. 



741 



money, 834; rate of excliange 
of iron for wheat during war, 
380; tariff of 1824-28 as to iron 
and steel, 382, 383; Euglisli pro- 
tection of her iron and steel, 489; 
in France, 498-503 ; slow growth 
of American iron and steel 
and final high prices under 
low duties, rapid growth and 
final low prices under high du 
ties, 500; iron and steel made 
with less labor cost, though at 
higher money cost, in Pennsyl- 
vania than in England, 511; 
Hewitt's facts refute Bastiat's 
sophisms, 511; wages of black- 
smiths and iron jniddlers in Am- 
erica and Europe in 1867, rates 
of, 511 ; quantities of pig and bar 
made in Germany, 520; iron and 
steel wages in Germany, 523; 
galvanized, protected in New 
South Wales, 530; grates, stoves, 
etc., protected in Victoria, 530; 
statutes maintained in England, 
to protect iron and steel manu- 
facture, 555; Michigan M'ould 
profit (Sidgwicli) in producing 
iron, by protection from Pennsyl- 
vania, 505; relative labor cost of 
producing iron in Pennsylvania, 
England and France, 573; im- 
porting English iron is an im- 
portation of the crops, etc. , con- 
densed into the iron, and dis- 
places American crops to that 
amoimt, 579; wages in rolling 
mills in United States and 
Europe, 586; revenue on im- 
portation of pig iron, whom paid 
by, 586; bar iron in part, 587; 
Mill on division of import du- 
ties, 587; wrought iron, English 
and American prices of, 590; 
American iron and steel wares 
pronounced superior bj" Birming- 
ham board of trade in 1868, 
Tjfmdon T'imes tells why, 590 ; 
export of agricultural imple- 
ments, values of, 610; exports of 
iron and steel wares from Ignited 
States, 610; American iron and 
steel mauufactnre and foreign 
pay duties on, fill, 612, 617; 
imports of and revenue from. 



613; iron and steel manufacture 
older than agriculture, 644; 
mythological antiquity of, 645; 
i^chliemann. Homer, Gladstone, 
and Goldziher on, 645; relation 
of Vulcan to, 645; small use of 
iron and steel in Great Britain 
in 1788, 646; growth of since 
1796 in England, 646; better 
protected in England than in 
United States from 1790 to 1845, 
648; disastrous effects of this 
fact on American shipping after 
1855, 648; world's product of 
iron, steel, and coal in 1883, 650; 
total production of iron and steel 
rails, pig, rolled, prices of steel 
and iron rails in United States, 
miles of railroad built, produc- 
tion of pig iron in Great Britain, 
and immigration from 1860 to 
1883, 651 ; Liverpool Cotton Cir- 
cular on effects of American 
tariff, 664 

Italian economists, Cossa, 24; 
Genovesi, 82; Beccaria, 82; Count 
Rosconi, 336 

Ital}^ monetary unit of, 338 ; 
parties in, 404 ; government, 
406, 407; in College of Cardinals, 
418 ; cost of army in, 438 ; low 
credit of, 448 ; tariff of, 530 ; its 
balance of trade against the 
United States, 6C0 ; product of 
iron, steel, and coal, 650 ; Eng- 
land's trade in cotton goods with, 
689 



Jamaica, cane-sugar growers seek 
union with United Slates or 
Canada, 505 
Japan, imit of, 338 ; loss of sover- 
eignty as to tariff, 533, 553, 554; 
averts an armed invasion in 1864 
bj' conforming her tariff to for- 
eign demands, 553 ; balance of 
trade against United States, 600 
Java, England's trade with, 689 
Jeffci-sonian protectionism, 640 
Jennv, spinning, invention and 

effect of, 681-684 
Jewelry, exports of, 610 ; inijtorts 
and revenue, 613 



142 



GENERAL INUEX. 



Judicial department most coercive 

on the citizen, 416 
Justice, administration of made 

subordinate to revenue in India, 

486 

K. 

Kansas, silk culture in, 632 
Kentucky, glass, 644 ; hemp, 652 
Knights of Labor, relation to the 

organization of labor, 310 ; 

strikes ordered by, 328 
Kopeck, 338 



Labor, conflicts in defining, 4, 12, 
14; bureaus of statistics of, in- 
creasing, 22 ; relation of labor 
class to price of bread, 26 ; rela- 
tive inducements to, in commun- 
al and private ownership, 41-54 ; 
how supply of affects price, 98 ; 
how affected by machine power, 
122 ; in Asiatic countries, 123 ; 
relation of to title, 125-130 ; can 
not give rise to titles, 129 ; divi- 
sion of, due to private title, 135- 
136 ; modes of division of i^roduct 
with capital, 163 ; when labor 
time became a commodity, 166 ; 
not the sole producer, 167 ; 
dividing product in railways and 
manufacturing, 172-181 ; capi- 
talizing the productive value of 
labor, 181 ; is not muscular 
effort, but organized obedience, 
182 ; produces only its own 
wages, and no surplus, 188 ; 
capital the chief laborer in civi- 
lized industry, 208 ; displace- 
ment of labor in one country by 
machinery in another, 209 ; 
helpless laborers find work most 
easily in cities, 219 ; how affected 
by large capitals, 219 ; capacity 
to produce food, 219 ; in iron, 
woolen, and other industries 
when aided by capital, 220 ; is 
freer where capitals are large 
227 ; first organizations despotic, 
233; labor on farms, 253-261 ; 
value declines directly as dis- 
tance from consumer of product 



increases, 259-262 ; distinction of 
labor from sport, from services 
sold to an employer, from 
crime, from effort put forth to 
produce, from capital, from im- 
plements ; is servile effort, 281- 
284 ; also distinguished from 
work, 284 ; from pleasure, 285 ; 
must be irksome and painful, 286 ; 
aversion to, 286 ; necessary con- 
trast between labor and pleasure, 
287 ; less broad than production, 
290 ; is obedience, 290 ; is only a 
part of industry, 290 ; combina- 
tions of laborers, 300-303 ; explo- 
sion of wage fund doctrine, 290 ; 
profits the true source of wages, 
293 ; population not a check, 
295 ; countries of clear and cheap 
labor, 297-300 ; is tlie ultimate 
receiver of all wealth, 305 ; 
works as even partner with capi- 
tal on farms, railways, and 
manufacturing, 309-315 ; is 
compensation of, increased by 
profit-sharing ? 314 ; labor not 
protected by excluding or les- 
sening population, 321 ; do 
wages of social labor increase 
with their social utility? (Elder) 
323 ; strikes and theii- cost, 328 ; 
woman's labor and wages, 325- 
328 ; affected by war and 
prices, 380 ; slave labor rises 
with profits, 384 ; the wage con- 
tract economical to the worker, 
433 ; how effected by spoliation 
of the capitalist class in India, 
485 ; labor cost, not the same as 
money cost, 511 ; of children in 
Russia, 527 ; value of, made 
eight time greater in United 
States than in China, by adding 
animal and machine power in 
production to human, 540-543 ; 
quality of Chinese labor, 547 ; 
labor troubles which would ensue 
from the premature introduction 
of foreign machinery and pro- 
cesses in China, 548 ; double 
employment of labor on home 
products than on imiDorted, 560 ; 
laborers protected by tariff 
duties, 609 ; no other ultimate 
destination exists for wealth of 



GENERAL INDEX. 



f43 



any kind or iu any hauds except 
to compensate labor and relieve 
want, 626 ; loss of employment 
in silk manvifacture in Eng'land 
under free trade in silks, 635-637; 
loss of employment in Unitc(l 
States in 1816 to 1819 by glut 
of English goods, 642 

Laborers, protected by tariH' duties, 
when, (i09 

Laces, 383 

Laissez faire, the doctrine defined 
and its decline referred to, 15 ; 
Carey assailed, 16 ; England 
dropped in jDractice, 17 ; its ex- 
tension to social classes hy Prof. 
Sumner, 21 ; losses by, 149 ; 
how the school of was founded, 
199 ; contrast between the actual 
English policy and Laissez 
Faire, 66, 67, 316, 317-431, 432- 
435 ; extent of English interfer- 
ence shown by local rates, 477 ; 
and by prohibiting tobacco rais- 
ing, 480-481 ; interference in 
foreign countries, 484-488, 489- 
491; in Ireland, 491-495; 
doctrine of Laissez Faire ig- 
nored and violated in China and 
Japan, 533-555 ; even to keep 
the peace discriminates against 
those whose occupation would 
be to break the peace, 578 

Lamps, exports of, 610 

Land, relation of title to, to tillage 
of, 125-130 ; distribution in 
United States, 139 ; division and 
allotment of, in Canaan, 138 ; 
Sparta, 138 ; Rome, 138 ; mode 
of surveying, 142 ; records of, 
143 ; rent and its relation to in- 
terest on capital, profits of en- 
terprise, and wages of labor, 
171-194 ; when capital, 210 ; in 
cities where land is dearest the 
poor have the best chance to live, 
219 ; wheat on Dakota land, 
219 ; land of less value than 
wages to one without capital, 
235 ; title to, begins in possession, 
237 ; always held by highest 
bidder, 237 ; how rent arises, ac- 
cording to Mill, Hamilton, Mac- 
leod, Fontenay, Jevons, Fawcctt, 
Sidgwick and Price, monopoly 



theory leads to the confiscation 
conclusion, 243 ; large holdings 
and bonanza farming, 265-274; 
Large holdings in the United 
States and England, 270-272; 
permanent land-holdings pro- 
mote nobilities, 402 ; lands and 
local government, 430; taxes on in 
China, 455 ; India, 455 ; Mill's 
desire to tax the unearned in- 
crement of value, 463 ; taxes 
on land-owners, 465-473 ; reve- 
nue from sales of, in United 
States, 468-474 ; effect of taxing 
occupant or owner on rents, 
474 ; when owner pays the land 
tax, 476 ; plans for transferring 
title from owner to tenant, 
477 ; crown lands, 479 ; land 
tax in England, 479-482 ; small 
value of land where national- 
ized, 488 ; land breaking uj) 
into small holdings in Germany, 
520 ; land communism in Rus- 
sia, 526 

Land-owners, protected by tariff 
duties, when, 609 

Lard, export, import, and reve- 
nue, 610-613 

Laurel, 340 

Laws, of economics, are natural 
laws, 2, 3, 4; unity of with physi- 
cal laws, 4; Mr. Mill's alleged law 
of equation of international de- 
mand is a verbal circle and not 
an economic law, 13 ; Laissez 
faire, an obsolete "law," 15; 
wage fund theory a verbal cir- 
cle and not a relation of cause 
and effect, 16; " profits the leav- 
ings of wages " also true only in 
the physical sense, 17 ; law of 
the value of economic facts is 
identical with the law of weight 
of physical substances (gravity), 
20; moral obligations contract as 
personal freedom increases, 20, 
21; superiority of law over em- 
piricism, 22 ; how arrived at, 23; 
relation of hypothesis and ex- 
periment to study of economic 
law, 24; Fawcett's alleged "law" 
of coincidence of prosperity of 
laborers and cheapness of bread, 
26; law of the bias of statistics 



744 



GENERAL INDEX. 



through widely extended in- 
terests, 30; of acclimating consti- 
tutions to unhealthy influences 
exploded, 32 ; of the constancy 
in ratio of crime to poverty, 32, 
33; and to inharmony of races, 
34; supposed ratio of prosperity 
to imports and exports exploded, 
35; morals grow with the means 
to be moral, 48; intellectual rise 
from barbarism to civilization 
is identical with an economic 
transition from ownership in 
common to private ownership, 
53 ; production springs from ex- 
change, 54 ; growth in wealth 
and individual freedom causes 
gTowth in corporations and vice 
versa, 57 ; within certain limits 
morality grows with liberty, 
crime increases with restraint, 
59 ; endurance in the state is 
proportionate to integrity in the 
family, 62 ; family influence as 
permanent as heredity is natural, 
63 ; with growth in wealth second- 
ary motives (moral qualities) 
grow, 63 ; as occupations multi- 
ply more, men work at work 
they love, 64 ; fighting force of 
nations is proportionate to their 
productive power, 65 ; an im- 
portant part of a nation's wealth, 
though not of relative wealth 
among the citizens, 68 ; law 
of equivalence in exchange 
expresses only a probability, 69, 
109; of evanescence of all wealth, 
70 ; of extinction as enjoyable 
wealth of all that is converted 
into and remains reproductive 
wealth, 71; the more social the 
use the less the perishability of 
, wealth, 72; evanescent in the de- 
gi'ee that it is vital, 73; wealth 
the fruit of abstinence, but great 
fortunes imply also that it has 
been reproductively used, 74; the 
pressure of want a perpetual 
spur, since the more we get the 
more we want. 77 ; Carej^'s law, 
that as society advances values 
decline and utilities increase, dis- 
cussed, 84 ; producers create 
commodities, consumers confer 



values, 86 ; demand causes pro- 
duction, 88; economic error pro- 
duces social insanity. 91; it may 
ensue from the error that labor 
causes value, 91 ; law of declining 
utility of enjoyable commodities 
causes exchange, 92, 95; aided by 
the law of unlimited capacity to 
feel secondary wants, 93 ; Gos- 
en's law of pleasure and satiety, 
94; law of rise of price in dispro- 
portion to scarcity, 95, 96, 97, 
115; law of rise of utility as com- 
modity approaches consumer, 98, 
99; labor only determines value 
in the degree that by producing 
a glut it impairs value, 99; buy- 
ing futures in grain equalizes 
prices, 104; price is governed by 
the proflt of future uses, not by 
cost of past exertion, 110 ; war 
only raises prices when it changes 
the volume of money (Tooke), 
113; increase in rapidity of cir- 
culation affects prices like in- 
crease in volume of money, 114; 
cost of production is no regu- 
lator of price, 114; cheapness in 
sources of supply will maintain 
a lower average price than the 
mere cheapness in the supply 
itself, 117; the latter may be tem- 
porary, former is permanent, 
118-120 ; freedom depends on 
profits rather than on relative 
prices of raw materials and 
finished products, 121 ; law of 
survival of poor in cities, 122; of 
declining values and wages as 
we go eastward, 122; causes, 123; 
of destruction of industries by 
competition, 124 ; that promises 
decline in value in proportion to 
their magnitude and lack of 
assets for their redemption, 127 ; 
individual liberty grows with 
private titles, 128, 139; and with 
the number and extent of private 
monopolies or personal titles as 
distinguished from communal 
ownership, 130, 131 ; and with 
the evolution of law and the 
state, 132; laws grow and rights 
arise as a compromise between 
usui'pation and resistance, 133- 



GEJSmUL INDEX. 



745 



135; private title causes exchange, 
137, 138 ; tlie state will aid every 
industry which the majority of 
the people desire, but in which 
they can not prolitably invest, 
151-155 : profit the economic 
cause of wages, 168 ; as much 
equivalence in exchange applies 
to the wage contract as to any 
sale of commodities, 173; emploj'- 
mcnt at wages tends toward 
equality of division or working 
on shares between the aggregate 
capital and aggregate labor, i76- 
178 ; rent tends to take a fourth 
of the produce of land, interest 
a fourth, and wages half, 177- 
180 ; profits tend constantly to 
fall to level of rent and interest 
or to be eliminated, 179-182; rate 
of profit is directly as the excess 
and inversely as the time in 
which it is made, 191; profits 
average twice the rate of interest, 
193; distribution of wealth causes 
production, 198 ; wealth means 
not commodities, but inequality 
among men in the possession of 
commodities, 202 ; the greater 
the accumxilations the greater 
the diffusion, 204 ; laboi-ing 
power is proportionate to and 
measured by capital, 208 ; as 
capital (machinery) grows, labor 
changes from toiling to knowing, 
208, 209, 299, 300 ; and combines 
command of implements with 
obedience to orders, 209; luxury 
relieves the distant, economj^ the 
near, 214 ; rates of interest de- 
cline as accumulations increase, 
220-224 ; money stays longest 
with those who make it most 
productive, 217 ; capital earns a 
declining rate in any one occupa- 
tion, but returns to its high rate 
in some others, 230; man's food 
increases faster than man, 231; 
Malthus' alleged law an error, 
231, 292, 296;' the more the mer- 
rier is economic law, 234; what- 
ever impairs the value of capital 
impairs rates of wages, 235; land 
is always held by highest bidder, 
238-240 ; rent is the sharing the 



produce earned with the capital 
that expels less productive oc- 
cupations, 242, 249 ; rent bal- 
ances transportation, 249-253 ; 
and disperses the less competent 
so that the more competent may 
have the space, 252 ; values of 
land per acre values of land pro- 
ducts per capita and values of 
labor on land all grow as farmers 
are few, and decline as they are 
many, relatively to those who do 
not farm, 256, 265 ; release of 
labor by machinery multiplies 
occupations while lessening toil, 
264, 265 ; with machinery, the 
less men work the more they 
get, 266 ; the bigger the farms 
the cheaper the wheat, 267-272; 
large estates make low rents, 272 
-275 ; the irksomeness of labor 
economizes huinan elfort, limit- 
ing it to the line in which it satis- 
fies social demand, 286 ; in the 
economic sense commodities are 
produced by entrepreneurs and 
the wage-worker produces only a 
diversion of the wages to himself, 
290; the alleged wage fund law 
a circuit of words, and not a true 
law of cause and effect, 291 ; the 
wage fund can not cause the 
wages, since it is the wages in 
total, 294; profits are the cause 
and measure of rent, interest, and 
wages, 294; tendency toward a 
minimum in old channels offset 
by a tendency toward the max- 
imum in new channels, 228, 294 ; 
difi'erence of average comfort 
among men much less than dif- 
ference of wages or income, 298 ; 
there is an economy in being slow 
as well as in being fast, 298 ; but 
the fast economy is in the lead, 
543, 545 ; regulating rates of 
wages implies state emploj'ment, 
301 ; trade unions " corner" the 
labor market on the same plan as 
brokers corner grain, 301 ; a com- 
bination among many may be 
destructive of industry, though 
its aim be one which, if pursued 
by each one singly, would be pro- 
motive of industry, 302 ; arbitra- 



'46 



GENERAL INDEX. 



tion cannot determine future rates 
of wages or prices of commodi- 
ties, 303, 304 ; agitations for social 
revolution exist wherever there is 
economic incapacity and miscon- 
ception, 305 ; money-making is a 
free art, as to it anarchy in the main 
already rules, 307, 309 ; society 
puts each man in his most useful 
place, 308, 309 ; capital and enter- 
prise only can organize destitute 
laborers, 310 ; destitute laborers 
can organize strikes, 310 ; but 
they can not organize labor, 310, 
328 ; all wages work is product 
sharing, at the halves or nearly 
so, 313, 313 ; labor markets can 
not become one market, 315 ; mil- 
itaiy protection to foreign trade 
may protect home wages in an 
exporting country, 316, 431, 483- 
495 ; increasing the diversity of 
industries in an importing country 
by protective tariffs also protects 
wages, 318 ; there can be no un- 
protected classes in a protective 
country, 320 ; excluding immigra- 
tion, unless of particular occupa- 
tions, would not protect wages, 
321 ; trade can only be made free 
as we are furnished with the 
means to trade with, 323 ; wo- 
man as a worker tends toward 
the family order and from the 
competitive sphere, 327 ; the 
sources of the low wages of em- 
ployed women is the reserve of 
unemployed, 327 ; money is the 
mainspring of industry, 332 ; 
coined money of depreciated met- 
al will remain at par partly on the 
credit which stamps it, 336 ; a cur- 
rency chiefly of coin tends to- 
ward adulteration, 339-342 ; rela- 
tive value of silver to gold seems 
to depend on relative quantities 
by weight in which they are pro- 
duced, the total values of both 
metals in use being the same, 345- 
366, 373 (see charts, p. 367) ; ex- 
changeable credit affects prices 
as paper or coin, 346, 391, 392 ; 
money tends constantly toward 
idealization, the substitution of 
faith for value, 349, 355 ; well 



sustained national debt will act 
as money in international trade 
between the borrowing and cred- 
itor countries, 354 ; cost of credit 
money is the cost of maintaining 
the credit, not of engraving the 
note, 356 ; fiat money overlooks 
the true sources of credit, 350, 
350 ; contraction in volume of 
money enslaves, expansion in 
good money frees men, 359 ; an 
economic illusion may produce 
substantial effects, 360; good times 
may attend bad money, 361 ; 
gold standard can not be violently 
established, 362 ; the world tends 
toward an equipoise of the two 
standards as between different 
countries, if it cannot have the 
double standard in all, 363 ; line 
of fluctuation of prices is made 
more uniform by the equilibrium 
of the two money metals, 364, 368; 
a country gains in both trades 
by successfully maintaining the 
double standard, making a profit 
on the sale of the dearer coin and 
the purchase of the cheap, always 
if the parity of the two is restored, 
364-365 ; Gresham's law, that 
adulterated money causes an ex- 
port of pure coin, or bad money 
drives out good, has no applica- 
cation to the case of a fall in the 
value of the bullion of which one 
kind of money is made, 368 ; a 
run for deposits, being the taking 
out of one to put into the other, 
becomes futile if all banks stand 
together, 370, 371; a resumption 
of specie payments after a long 
suspension is an inflation, and 
tends to a speculative crisis, 371 ; 
the maxim, a crisis due in En- 
gland every ten years, in America 
every twenty, fails in 1887, 374 ; 
freer importation tends to produce 
a crisis within three years, whe- 
ther in England, 375-376, 377, 
378, 389, 390 ; or in the United 
States, 381, 382-385, 386-388; the 
law, that a country is drained 
when the balance of trade is 
against it, admits of no real ex- 
ceptions, the alleged exceptions 



GENERAL INDEX. 



V47 



being only failures to get at the 
true balance sheet, 393-395 ; mon- 
etary and commercial crises are 
largely due to misgovernmeut, 
and the advantages they confer 
are the adaptation of business to 
misrule, 397 ; governments are 
natural and inevitable, 399-406 ; 
the political state takes its form 
from the occupations of the peo- 
ple, and is military, hereditary, or 
elective, as occupations are war- 
like, agricultural, or diversified, 
401-42~9, 432-435 ; political gov- 
ernment by males is co-extensive 
with the extent to which govern- 
ment is coercive, 435, 436 ; attrac- 
tive functions, such as reigning, 
where a premier governs educa- 
tion and all forms of culture by 
government superintendence, are 
non-sexual, 434 ; do not enforce 
themselves, 436 ; difference in the 
feasibility and economy of laws 
generally assented to and those 
enacted by narrow majorities, 
436 ; division of function between 
the sexes is economic of the 
welfare of both, 436 ; saving 
money by dispensing with armies 
is a doubtful experiment in the 
economic aspect, 437-439 ; all 
States are army-made, 439 ; crime 
an economic problem, 441 ; over 
long periods human utilities and 
mischiefs are more nearly equal- 
ized than over short, 445-448 ; 
facility in negotiating state loans 
tends toward socializing state 
functions, 449-451; a theory of 
taxation ideally equal in the view 
of all minds is a chimera, 456, 
457 ; none can follow the final 
incidence or burden of taxes, 463- 
465 ; the i^roductiveness or bene- 
fits of tazation is traceable, 465- 
468 ; protective tariff's always 
produce the largest ratio of rev- 
enue to importations, 469-472 ; 
and stimulate immigration by 
raising wages, 473 ; universal 
suffrage taxes capital, 474; limited 
suffrage and aristocratic govern- 
ment tax vulgar consumption, 
480 ; facility in raising local loans 



and laying local taxes favors so- 
cialistic expenditure, in England, 
478 ; in United States, 150-155, 
474 ; import duties can only be 
limited to a revenue function 
purely by proliibiting the dom- 
estic productioTi, 480 ; hence a 
country which could produce 
everything could not lay a pure- 
ly revenue duty, 562 (pre- 
face) ; a human-labor country 
can not give free-trade to a 
machine-labor country without 
being ruined, 484-496 ; it must 
at all cost import the machin- 
ery or process instead of the 
product, 484-496 ; foreign con- 
quest makes great landlords, 270, 
484-486, 520, 521 ; persistent pro- 
tection to many industries mul- 
tiplies land-owners and self -em- 
ploying small proprietors,496,497, 
520, 521; true protection begins 
by protecting raw materials, 
France, 498 ; protection a short 
road to cheapness and abun- 
dant supply, 505 ; France in 
beet sugar, 20 years, 515-521; 
United States in cutlery (8 
years), 596; if scarcity or dearness 
is like that produced in spring by 
sowing seed instead of consum- 
ing, it is better in the long run 
than the transient plenty pro- 
duced by consuming seed that 
needs to be sown ; Bastiat's 
scarcity and abundance argu- 
ment therefore is too simple and 
single to meet the protectionist 
argument, 508-510 ; law of 
migration of labor and capital, 
146, 229, 274, 492-511; protec- 
tion in proper cases maximizes 
the return and minimizes the 
effort to the world at large, 511; 
production of unlike products 
not of unlike values creates com- 
merce, 513; hence commerce 
between countries having equal 
facilities for producing differ- 
ent products is profitable to both, 
but that between countries hav- 
ing different facilities for pro- 
ducing the same products is 
ruinous to one, 513; a country 



748 



GENERAL INDEX. 



which exports its raw materials 
remains poor ; it grows rich as 
it advances to tlie export of its 
finished products, 515-521; mili- 
tary energy is proportionate to 
economic wisdom, 516; national 
power and unity proportionate 
to its fidelity to the protection of 
its own industries and popula- 
tions, 515-521; The policy of 
making one country the work- 
shop of the world requires con- 
stant aggressions on the rights 
of barbarian and hand-labor 
nations, 533-554 ; free trade in 
competing products may change 
the place of production, but 
has no permanently cheapening 
effect on prices, 559-560; pro- 
tection can only raise prices 
while it is increasing domestic 
competition which will reduce 
prices, 563 ; free trade (the sub- 
stitution of importation for pro- 
duction) employs one domestic 
capital where protection employs 
two, and results in one domestic 
supply for consumption where 
protection results in two, 571- 
574; law, that as Avages rise pro- 
fits fall, is disproved in theory 
and fact, 579-584; protective 
duties collect revenue from for- 
eign producers in part, 584; 
wherever foreign producers can 
not add duty to their price, but 
can deduct it from their profits 
and still leave a profit, they con- 
tinue to import notwithstanding 
they pay the duty, 585-594; a 
wisely laid protective duty never 
can need repeal, as it repeals it- 
self as fast as it produces cheap- 
ness, 596 ; exports depend on 
cheapness in their productions, 
not on willingness to buy of 
their foreign purchasers, 599, 
600; home trade is freer than 
foreign because it takes pay in 
more products, 602; matters of 
public interest are always mat- 
ters of private interests publicly 
considered, 603; law of effect of 
import duty on the price of 
domestic article, 610-617; can 



only raise the price where it is 
forcing a new industry, 617; 
the law of decline of the tariff tax 
stated, 618; it bears a like propor- 
tion to the portion of the duty 
paid by foreign producers as the 
deficit in domestic supply bears 
to the whole domestic demand, 
619-622; the greater the national 
surplus relatively to a uniform 
demand the less the value of the 
aggregate product (cotton), 687; 
economy of a rise in prices due 
to a lessened supply, 689; the 
smaller the quantity obtainable 
the greater its aggregate value, 
690 

Lead, German imports and ex- 
ports of, 519; revenue paid by 
foreign producers of lead im- 
ported into United States, 586; 
white lead, revenue on, paid by 
foreign producers, 586; exports 
of, 610; imports and revenues, 
613 

Leather, manufacture in United 
States, division of product in, 
312 ; in France, 498, 499, 503 ; 
Germany, 520; Ireland given 
freer leather than England, 490; 
revenue on imports into United 
States, whom paid by ? 584 ; 
exports of, 610 ; imports and 
revenue from, 613; American 
leather trade, 697, 698 

Legislation, influence of private 
interests upon, 36-38; functions 
of state in, 136 ; absence of, 
against waste of lands, forests, 
148; concerning rivers, 149; ef- 
fects of neglect as to highways, 
149-150; by states and Congress 
as to railways, 150-161; as to 
rates of Avages, 166 ; restricting 
banks from issuing notes, 349; 
act of 1844 concerning issues of 
notes, 377; suspension of, 377; 
tariff of 1816-1824-1828, _ 382, 
383 ; proposal to emancipate, 
384; tariff of 1846 and effects, 
385-388 ; in England, how con- 
ducted, 411 ; a check on the 
executive power, 416; affects 
the citizen at what points, 417 ; 
English habit of legislation by 



GENERAL INDEX. 



749 



piecemeal, 478 ; protective, 
denied to Indian, 487; act of 
of union a scheme to destroy 
Irish manufactures, 493-494 ; 
summary of protective laws 
maintained by Great Britain for 
440 years, 555 ; concerning wool, 
669-671 

Leicester wools, 672 

Liberia, dollar, 338 

Lime, export of, 610 ; import and 
revenue from, 613 ; in iron man- 
ufacture, 645 

Lincolnshire wools, 673 

Linseed oil, revenue on, paid by 
foreign producers, 5b6 

Liquors, taxes on, 475 : effect of, 
on labor in Russia, 337; taxes on, 
in Russia, 537 

Lira and Lire, monetary unit of 
Italy, 338 

Liverpool, customs officials in, 
483 : growth of, 490 

Loans, to the state, inducement 
to (Adams), 448 ; a form of in- 
flation, 449 ; local loans in Eng- 
land, 476 ; in India, 486 ; by 
Germany, 518-530 

Local, taxation, 459 ; government, 
439 ; in United States, 468 ; in 
Great Britain, 476 ; in France, 

■ 497 ; but little craved in Russia 
except in the commune, 530 ; 
effect of local taxation to reduce 
protection, 694 

Locks, door, chest, cupboard and 
drawer, export of, 596 

Locomotives, 519 

London, city government of, 405- 
483 ; made great by three- 
cornered trade, 601; decline of 
'silk industry in, 636 

Loom, invention of, 484 ; power 
loom, 681-685 

Lords, Ho\ise of, 426; how con- 
trolled by Commons, 427 

Loss, as an economic force, 188-191 ; 
proportion of losers to winners, 
89; losses to wage-workers and 
employees by strikes, 310, 338 ; 
indirect profits involved in loss, 
211 ; taxes on, 456 

Lumber, manufacture of in United 
States, returns to labor and cap- 
ital and division of product in, 



313; strikes in, 310-338; reve- 
nue on imports of , paid by foreign 
producers, 586 ; exports of, 611 ; 
imports and revenue from, 614- 
653 ; Canadian producers bear 
the tax, 610-618 

Lunacy, individual and social, 445- 
447; may consist in economic 
error, 91 

Luxemburg, 514-531, 650 

Luxury, relieves a more distant 
and precarious laborer than in- 
vestment, 814 ; its relation to 
happiness, 315 ; taxes on, 456, 
461; fallacy of basing taxation 
on distinction between luxuries 
and necessaries, 461, 517 . 

Lynn, shoe and boot production in, 
'697, 698 

M. 

Macedon, 359, 417 

Machinery, displacement of labor 
in one country by machinery in 
another, 209; makes capital the 
laborer and labor only the 
kiioiver in civilized countries, 
208; on farms, 219; in iron, 
woolen, wheat, bread, printing, 
building, boots and shoes, etc., 
330; growth of, in extensive 
farming, 368-367; aids large hold- 
ings and cheap production, 363- 
375; cast-iron plows, 264; gang 
plows, 364; harvesters, 865; 
eff'ects of on labor, 267; does it 
lessen demand for labor, 897- 
399; effects in determining- 
wages, 318; absence of machine 
power in China and economic 
effects of, 540-553 ; do machines 
and animals by exempting man 
from toil increase his thinking 
powers in like degree, 548, 543; 
economic power of United 
States measured against that of 
China, 543; effect of premature 
introduction of machinery by 
foreigners on native industries of 
China, 547; wages in manufac- 
ture of machinery in United 
States and Europe, 581, 583; ex- 
port of sewing, sausage, weigh- 
ing, washing, mowing and kib- 



150 



GENERAL INDEX. 



bliug machinery from United 
States, 596; weighing machinery, 
exports of, 611 

Mail steamers, of America, how 
lost, 657; of England, France 
and Germany, how subsidized 
and sustained, 657--664 

Majority, modes of determining, 
403; may be of military force, 
of capital, or of both, 412; close 
approach of the two, 66; wlieu 
numbers only count, 414; Cal- 
houn's plan of government by 
concurring majorities, 414; all 
majorities reduce to one efficient 
vote, 421 ; the rest are inefficient 
or surplus, 421 

Malt, excise duty on, 481 

Mai thus' law, of population, 230; 
rate of increase in man and his 
food, 231 

Mahbub, monetary unit of Tripoli, 
338 

Man, rate of increase of, and his 
food, 231; his weakness as a 
savage, 232 ; requires diversified 
industries for his culture and 
happiness, 317,318: Elder on rise 
in rank of labor according as it 
fixes Itself in things, institutions, 
or man, 323; growth of value of 
human life, 445; his secular in- 
terests rescue him from suffering 
brought on by fanaticisms, 446- 
447 ; * 'man is man, ' ' — this (Perry) 
dispenses with economic facts, 
571 

Manchester, school of political eco- 
nomists, 15 ; who oppose its the- 
ories, 16 ; its chief function, 40 ; 
trade built up by subversion of 
Hindoo industry, 486 ; growth 
of, simultaneous with that of 
power spinning, 685, 686 

Mauufactui-ers, foreign inspire the 
free trade criticism, 604, 605 ; of 
sugar pay the duties on crude 
sugar, 618 

Manufactures, in United States, 
147; profits of English, 178; 
how aided by division of labor, 
219 ; how manufactures affect 
values of farm lands, wages of 
farm labor, and prices of farm 
products, 256-262 ; profit shar- 



ing in, 311, 312 ; beginnings of, 
319 ; number engaged in, in 
United States, 320 ; strikes in, 
328 ; growth of cotton manu- 
facture during war, 380 ; make a 
home market for breadstulls, 382; 
wreck of, under tariff of 1833, 
382 ; same under that of 1846, 
382-386 ; tobacco manufacture 
heavily protected in England, 

481 ; also rum, slightly, 482 ; 
brandy and patent medicines, 

482 ; Hindoo manufactures sub- 
verted, 484 ; by forcing free 
trade in English goods on India, 
while England retained protec- 
tion against Indian goods, 487 ; 
same policy pursued by England 
with Turkey, 488-491 ; excel- 
lence of Turkish manufactures 
until undermined, 489 ; decline 
of since 1812, 490 ; decline of in 
Ireland since Act of Union, 491- 
495 ; number engaged in, in 
France, 496 ; of beet sugar in 
France and Germany, 503-506 ; 
manufactures as a force in eman- 
cipating serfs in Russia, 527 ; 
effects of premature introduction 
of steam manufactures by for- 
eign owners in China, 547 ; skill 
of Chinese as manufacturers, 
552 ; statutes enacted in aid of 
manufactures in England for 440 
years, 555 ; manufactures made 
for all the world not of good 
quality, 567 ; foreign manufact- 
ures, hoAv driven out of the field 
at their own cost, 588 ; foreign 
manufacturers and producers 
the exclusive promoters of free 
trade in United States, 604, 605 ; 
of copper, brass, etc., imports, 
exports, and revenues, 610, 613 ; 
list of protected products which 
are both imported and exported 
from United States, 610, 613 ; 
their relation to the tariff and 
farmers as stated by Shearman, 
611 ; value of British manufact- 
ures, 637 ; Hamilton's report on 
glass manufacture. 639 ; growth 
of in 1806-15 during non-inter- 
course, 641 ; views of Hamilton, 
Madison, and Jefferson on, 640. 



GENERAL INDEX. 



751 



642 ; quantities and values of 
glass manufactures in United 
States, 644 ; manufacture begins 
in iron and steel, 644, 645 ; rela- 
tive position of, in England and 
United States in 1740, 653 

Marble, exports, imports and reve- 
nues from, 613 

Mark, 338 

Markets, the index of values, 99 ; 
defined b_y Jevons, Cournot, and 
others, 99-l(i2 ; leading, of the 
world, 99-101 ; grain markets 
and their effects on prices and 
production beneticial, 107-120 ; 
effect of market prices on pro- 
duction, 114 ; effect of distance 
from, on modes of production, 
247-262 ; obstructions between 
independent labor markets essen- 
tial to preserve higher prices in 
one than the other, 315 ; Andrew 
Jackson on American markets, 
882 ; taxes on, 455 ; for English 
goods, the object of colonization 
and conquest, 484 ; in Prussia, 
520 ; distance of markets lowers 
the quality of manufactvires, 
567 ; value of markets depends 
on past political and collective 
action of the nation in which 
they are, 574, 575 ; hence for- 
eigners have rights in them sub- 
ject to the national will, 576 ; 
Birmingham supplanted in its 
old markets in iron and steel 
wares by American, 596 ; free 
trade, dividing the home mar- 
ket, causes dearness where the 
home market must be the chief 
source of supply, 609 ; protection 
secures the whole market and 
divides payment of the revenue, 
free trade divides the market and 
obliges American consumers to 
pay all the revenue, 612-615 

Marriage, statistics of, 30 ; effect 
of on woman's work, 326; mono- 
gamy, relation to race, food, and 
economic conditions, 402 

Massachusetts, population in 1790, 
140 ; aid to railways, 153 ; ad- 
vance in fertility of soil, 252, 
254, 328 ; cidtivated land. 546 ; 
rates of wages in, and in Gre;it 



Britain, 582 ; beginning of silk 
manufacture in, 632 ; as a colo- 
ny protected sheep, wool and 
wool manufacture, 676 

Matches, export of, 610 ; import 
and revenue from, 613 

Mathematical instruments, export 
of, 610 ; import of and revenue, 
613 

Maximilian, and foreign bondhold- 
ers in Mexico, 450 

Meat, cost of, 25 ; consumption of 
in United States, 224 ; relative 
shares of capital and labor in 
first division of product, 312, 
520 

Mecklenburg, 515 

Medicines, patent, British duties 
on, 482; American export of, 610 

Men, in war, 437 

Mercantile debt in United States, 
448 

Merchandise, glut of, may produce 
inflation, 384 

Merchants, qualities essential to 
success, 400 ; debts of, in United 
States, 448 ; liable to mistake a 
tax collector for a thief, 453 ; 
English merchants in Cldua al- 
ways backed by English troops, 
536 

Merino, wools, 672 ; Napoleon on, 
674 ; in America, high prices on 
merino sheep, 676 

Metals, division of wages in 312 ; 
English and American wages in, 
582 ; strikes in, 328 ; imports of 
and revenues from, 613 

Methods in political economy, 
9-36 ; the metaphysical, 12 ; 
the scientific, 23 ; metaphysical 
scliool of, 13, 9-36; bias re- 
flected in economic discus- 
sion, 330 ; on final incidence 
of taxes, 460 ; futility of meta- 
physical aphorisms in the case of 
a protective tariff producing 
revenue, 469-472 ; Perry's dog- 
ma "the facts are too many — it's 
simpler without," 571 ; how big 
an inverted pyramid can topple 
on an "if" in Perry's treatment 
of the tariff, 589 ; " reasonable 
suppositions " substituted for 
science, 589 



753 



GENERAL INDEX. 



Mexico and Mexicans, tribal own- 
ership in ancient, 23 ; production 
of pr'ecious metals in, 366 ; Uni- 
ted States dependent on for coin 
from 1790 to 1852, 384 ; moneta- 
ry unit of, 338 ; centralization in, 
416 ; import and exjaort duties, 
416 ; effort of bondholders to 
seat Maximilian, 450 ; tarifl:,530; 
cultivation of silk in, 631 

Michigan, economic gain, (Sidg- 
wick), by protection against 
Pennsylvania, 562, 665, 666; 
vrools of, 672; salt production 
in, and state aid of, 693-697; ef- 
fect of competition to compel 
importers to pay duties on im- 
ported salt (diagram), 696 

Migration of labor owing to lack 
of employment, 146-148, 274, 
275, 492, 494, 511; of profits, 
229 

Military, strength of protective 
policy, 515 ; in Germany and 
France, 515 ; military coercion 
in enacting tariffs of China and 
Japan, 533; military protection 
to export trade, 608, 628 (see 
India, Ireland, Turkey, China, 
Japan), 675 

Milk, export of, 610; import and 
revenue, 613 

Mills, coffee, English and Ameri- 
can prices of, 590; number of 
mills in Canada, 665, 666-668 ; 
in cotton, in England, 689 

Milled coins, 340 

Milreis, 338 

Mineral, door-knobs, English and 
American prices of, 590 

Mines, mortality in, in Germany, 
32; production of gold and silver 
in mines of all countries, 366; 
quantity of coal mined in 
Germany, 520 ; taxes on, 454; 
number employed in, in France, 
496; women work in mines in 
Germany, 525; in United States, 
327; natural conditions alone do 
not insure success in mining, 
573; mines probably first paid 
rent, 645 

Ministry, government by responsi- 
ble, 410 

Minority, rights of, 441 



Mint of Bombay, ornaments 
brought to, 331; of United States 
on coins, 338; of London, 342; 
rate of coinage in United States, 
384 

Mir, of Russia, 526-530 

Missouri, glass, 644 ; compromise 
on slaver}^ 688 

Mohammedanism, opposed to tax- 
ing foreigners, 488; large ele- 
ment in British Emijire, 516; 
ascendancy of Mohammedan 
races in iron and steel manufac- 
ture in middle ages, 646 

Molasses, 520; export of, from 
United States, 611; import and 
revenue, 614 

Monarchy, relation of to liberty, 
404-405; when absolute, not- 
withstanding a parliament exists, 
406; when advisory and parlia- 
ment absolute, 406; how the one 
vote determines majorities, 422 

Money, conflict in defining, 6; 
Lord Liverpool on, opposed by 
Carey, 16; views of mercantile 
school on, 18; social uses of, 75; 
how circulation of, influences 
prices, 122; brought by immi- 
grants, 148; as a force in abol- 
ishing slavery, 164; in prosecut- 
ing war, 221; organization of 
society by money wages super- 
sedes that by rank, 225; money 
defined, 329-333; by Jevons, 
Sidgwick, Walker, Hume, Ca- 
rey, Roscher, Devas, White, 
329, 330; meaning varies in dif- 
ferent uses, 330; begins as 
hoarded treasure uncoined, 331; 
its potency, 333; supersedes not 
peaceful barter but forcible seiz- 
ure, 333 ; oxen used as, 333 ; its 
three forms, 335; value of coin 
not wholly dependent on value 
of bullion, 336; Count Rosconi 
on, 336; evolution of British 
coinage, 339-341; relation of 
money to prices, 343; proportion 
of coined to credit money in use, 
344; what constitutes the vol- 
ume of money, 344 ; ratio of 
value of silver to gold and how 
affected, 345; bills and notes, 
346-349; deposits and checks. 



GENERAL INDEX. 



753 



351; bank-notes, 350-352; na- 
tional debt as international cur- 
rency and affecting prices, 353- 
355; cost of credit money, 355- 
357 ; volume of, 358; influence 
of expanding volume of, 359- 
361; Hume, Alison, and Walker 
on, 358-361; how affected in 
dearnessby scarcity, 372; money 
manufactured rapidly during 
war, 380; inflation in 1833-37 in 
United States, causes of, 382- 
385; sudden dearth of money in 
1837, money an implement and 
not safely exportable from a coun- 
try except within stringent limits, 
383-385 ; paper money in United 
States, 384 ; too many goods in 
market may cause inflation of 
paper money and discounts, 334; 
rapid production of gold, inflat- 
ing credits and importations 
may produce crisis, 384; expan- 
sion in, 387; relation of govern- 
ment bonds to, 449; cost in money 
not the same as cost in effort, 511 ; 
experience of Russia in suspend- 
ing and resuming on paper 
money, 528, 529; money cost 
and not relative cost in labor or 
effort may determine a new coun- 
try's ability to compete with an 
old in a new industry, 573; 
Hewett on labor cost of Ameri- 
can, English, and French iron, 
573 ; money a greater king than 
cotton, 688 

Mongolia, tribal ownership in, 23 

Monometalism, 361-369 

Monopoly, and title, 130; and 
the state, 131; not feared in 
sparse settlements, 145 ; Mill 
holds rent to result from, 242; of 
opium production by England, 
tobacco by France, etc., 456; of 
barbarian trade by military force, 
521; effect of, on wages, 623- 
626; early English laws to pre- 
vent monopoly of profits of 
wool raising, 669 

Montreal, Board of Trade and Corn 
Exchange, secretary's report on 
Canadian manufactures, 665 

Morals, state regulation of, 431 ; 
the more exacting the law the 



more lax its enforcement, 435 ; 
no ethical perfection in govern- 
ment, 440 ; morals and crime, 
441 ; in France, 442 ; in China, 
545, 552 ; moral value of an ex- 
tra dollar to the workman on 
Saturday night, 583 
Morrill Tariff, effects of, 469-472 
Moslemism, can accept no revenue 
from foreigners and therefore 
practices free trade, 488 
"Motive" is motive (Perrj^), 571 
Mulberry speculation, 632 
Municipal debts in United States, 

448 
Murders, constancy of, 32, 443 
Musical instruments, export of, 
610 ; imports and revenue from, 
613 
Mutton, exports, imports, and reve- 
nue, 610, 613 

N. 

Nails, export of, 596 

Nassau, 513 

Nation, profit to, not identical 
with profits to individuals, 67 ; 
national wealth, what is, 68 ; re- 
lative profits of national indus- 
tries, 36 ; nationality of immi- 
grants, 148; crisis in one nation af- 
fecting another, 377, 385, 389,391; 
debts of, 448; of United States, 
448 ; state corporate and private, 
448 ; national unity in Germany 
a result of protection, 514-525 ; 
national policy inCanada allied to 
l^rotection, 531 ; national unity in 
France, Germany, United States, 
etc., promoted by protection, 
628-630 ; national quality of 
sliips, 654 ; national apprentice- 
ship in new industries, 569 

Nationalization of laud, advocated 
by George, 125-129 ; in India, 
486 ; destroys values of land and 
wages of labor, relativelj" to pri- 
vate ownership, 481-488 

Naval stores, export of, 610 

Navigation laws, of England, ap- 
proved by J. S. Mill, 557 ; Jeff- 
erson thought navigation a "pro- 
tuberant " interest, 598 ; laws to 
encourage, in United States, 652 



V54 



GENERAL INDEX. 



Navy, expense of navy department 
in United States, 468 ; of navy 
in England, 478 ; compared with 
the paupers of England, 478, 
479 ; expenditure on, in France, 
497 

Necessaries, 461 

Netherlands, monetary unit of, 
338 ; woolen manufacture in, 
669 ; trade of, for English wool, 
669 

New England, as affected by free 
trade with Canada, 574-576 

New Jersey, 140, 261 ; railways in, 
154, 264 ; value of land in, com- 
pared with India, 488 ; propor- 
tion of land and tillage to popu- 
lation, 540 ; glass manufacture 
in, 639 

New South Wales, 530 ; tariff of, 
compared with Victoria, 530 

New York, railway transportation 
in, 220 ; railway consolidation 
in, 220; infant railways in, 151, 
153, 155, 217; freights to, 221; 
size in 1790, 141 ; in 1781, 150 ; 
effect of canal policy, 150; its 
statehood, municipal only, in in- 
ternational affairs, 415 ; cultiva- 
tion in, 232, 546; land values, 
246 : fertility, 252, 254 ; land 
cultivated in, 546 ; glass manu- 
facture in, 639 ; salt production 
and state tax on, 693-697 

New York City, change of rents 
in, by removal of dry goods 
trade, 70 ; markets in, 100 ; 
railway fi'eights from Chicago 
to, 221 ; Chase and its bankers in 
1861, 221; its city government, 
405; taxes in,468 ; glass. 639, 643 ; 
prices of wool in, 679-681 

New Zealand, 445 

Nihilists, of Russia, not an econo- 
mic party, and do not represent 
poverty, 530 

"North" the, in the war about 
slavery, 415, 687, 688 

Nobles (half, qr.), 340 

Nobility, and land, 402 ; in Eng- 
land, their part in government, 
406 

Norway, monetary unit of, 338 ; 
American balance of trade 
against, 600 



Notes (see Bills) ; relation of bank 
notes to crises, 371-385 

Nova Scotia, 667 

Nuts and bolts, American super- 
seding foreign in 1868, 596 

O. 

Obedience, or subordination, is the 
essence of the wage contract, 
184 ; amount of, required in- 
creases as centers of industry be- 
come compact, 210 ; habits of 
discipline fit one to command, 
307 ; obstructions to equaliza- 
tion of labor, 315, 316 ; essential 
in business, 400 ; disobedience in 
its relation to crime, 444 

Obstacles to production, do not 
cause pi'oduction directly, 511 

Occupant, relation of occupancy 
to title, 51-52; to labor, 125- 
130 ; to conversion of public 
land to private, 141 ; to rent, 
243 ; taxes on occupant of land 
in England, 459 ; as to United 
States, 473 ; rates paid by, in 
England, 476 ; land tax and 
house duty, 479 

Occupations, only a master of an 
art can teach its theorj^, 8 ; not 
all interested in low prices of 
food, 26 ; as society advances 
occupations become more con- 
genial, 64 ; tendency of, to col- 
lect in one center and make mar- 
kets, 100 ; rate of returns in, 100; 
necessity of capitalists, 227 ; 
princif)les governing the re- 
wards of various, 243, 244 ; agri- 
cultural and manufacturing oc- 
cupations are the natural mar- 
kets each for the other, 256-266; 
new occupations multiply with 
machinery and capital, 265-266 ; 
division of returns in, 312-316 ; 
protected, 320 ; women's, 326- 
329 ; strikes in, 328 ; effect of 
taxes on, to create a monopoly, 
464 ; forms of government, 
moulded by, 403 ; house duty, 
income from, in England, 479 ; 
occvipation changing to desola- 
tion and desert under free for- 
eign trade and internal taxes in 



GENERAL INDEX. 



Ibi 



Turkey, 490 ; number iu all oc- 
cupations in France, 496 ; occu- 
pations of German women, 524, 
525 ; wages in various occupa- 
tions in United States, Great 
Britain, France, Russia, and 
Prussia, etc., 581, 582'; relative 
wages of women and children in 
Massachusetts and England, 583 

Ocean-sailing craft, growth of, in 
United States under protection in 
1789 to 1816, 652-656; final down- 
fall of, under free competition in 
carrying, due to vigorous protec- 
tion to English iron and steel 
industrj^ and no protection to 
American, 640, 656 ; subsidies to 
English ocean-going vessels, 659, 
662, 663 ; denial of subsidies to 
American ocean-going vessels, 
657-658 

Officers, 423, 424 ; of customs iu 
England and America, 482 ; 
native and English officers of 
army in India, 486 

Offices, sale of, taxed in China, 455 

Ohio, land system in, 142; railroad 
aid in, 254; corn production in, 
252; farm products in, 261; ten- 
ant farms in, 269; manufactures, 
664, 666; agricultural report on 
wheat, 25-4 ; woolen manufac- 
turers of, 666; salt production 
in, 693 

Oils, exports of, 610 ; imports of 
and revenue from, 613 

Olive trees taxed, but imports free, 
in Turkey, 489 

Ontario, manufactures, 667 

Opium, forced on China by war, 
534 

Organizations, of working-men to 
resist employers, 309-311 ; co- 
operation, 311-314 ; of industry, 
432, 433 ; of home industry, 567 ; 
of all opposition to established 
industries uses same means as 
protection, 569 

Organization, labor, their motive 
in America since 1873, 597 ; of 
societv depends on iron and steel, 
645, 646 

Ornaments, of gold and silver, 33 

Ottoman Empii'e,revenue policy in, 
320 ; monetary unit, 338 ; econ- 



omic condition and free trade 

career of, 488, 491 
Over-trading and crises, 377 
Oriental and Levant Trading Co., 

490 
Owner and occupier, which pays 

taxes, 467, 476 
Oysters, exports, imports, and 

revenue, 610, 613 



Paintings and engravings, exports, 
610 ; imports and revenue, 613 

Paints, exports of, 610 ; imports 
and revenue, 613 

Paper, 393 ; English duties on 
Irish fourteen times higher than 
Irish duties on English, 493, 515, 
519 ; protected in New South 
Wales, 530 ; wages in paper 
manufacture in America and 
Europe, 581 ; United States 
revenue on paid by foreign pro- 
ducers, 586; exports of, 610; 
imports and revenue, 613 ; 
American duties on, sustained, 
622 ; who pays, 610-613 

Parasols, export of, 611 ; imports 
and revenue, 614 

Paris, lacemakers of, 214 ; rents in, 
242 ; city government of, 4(15 ; 
fertility of its pavements, 122 

Parish, rates and their iise, 476 

Parliament, acts of, as to wages, 
166; as to bank notes, 349; 
government by, 406-412; election 
of members, 418 ; relations to 
the miuistrj^ 410 ; absolute, 
426; practical assertions of, 426; 
mode iu whichCommons control, 
427 ; protective laws passed by, 
555 ; its inquiries concerning 
decline of silk industry-, how an- 
swered, 636-637; early protective 
measures towards wool and 
woolens, 669, 670 

Partnership, between capital and 
labor, 163-215 ; between govern- 
ment and those who as manu- 
facturers of liquors collect the 
taxe thereon, 528 

Parsimony, 218 ; not always econ- 
omical, 226 ; of American gov- 
ernment squanders its maritime 
wealth, 652-664 



^56 



GENERAL INDEX. 



Party, all governrflent carried on 
by, 403 ; majority, how deter- 
mined, 403 ; in France, 403 

Passenger receipts, excise on, 481 

Passion, its spliere in government, 
398-399 ; its relation to crime, 
443 

Patents to inventors, a form of 
protection to industry, 675 

Paterson, city of, 640 

" Pauper labor of Europe," phrase 
originated with A. Jackson, 643 

Paupers, 382 ; in England, 475 ; 
avoided in Russia, 526 ; schemes 
of raising silk-worms by labor of, 
631, 632 

Payment, demand multiplies means 
of, 221 ; social workers of higher 
class can not be paid in a part of 
the product, 323 ; money as 
means of, 329-339 ; by bills and 
notes, 345-348 ; money of ac- 
count, 348 ; debt as means of, 
393 ; for public service, 424 ; 
national debts as means of, 447- 
451 

Peace, effect of, on industry, 380 ; 
in Turkey, 490 ; effects of peace 
of 1816 on American manu- 
factures, 641, 642 •, motto of Cob- 
den Club not sustained by the 
aggressive tendencies of free 
trade, 534-555, 630 

Penitentiary system, 440-445 

Penknives, American superiority 
in, 596 

Pennsylvania, influence of, on Ger- 
man political economy, 514 ; 
manufacture of glass, 638, 641 ; 
as a colony protected sheep, wool, 
and woolen manufacture, 676 

Penny and Pence, 339, 340 

Pens and pencils, imports of and 
revenue from, 613 

People, sense in which they rule, 
417 

Perfumery, exports of, 610 ; im- 
ports of and revenue, 613 

Peru, ancient mode of ownership, 
23 ; diamond hunters of, 214 ; 
monetary unit of, 338 ; recent 
reverses of, 440; subservience to 
bondholders, 450 

Peseta, 338 

Peso, dollar of South America, 338 



Petroleum lamps, Americans su- 
perior in, 596 

Philadelphia, city government, 405 

Phoenicia, 453, 455 

Piaster, monetary unit of Egypt 
and Turkey, 338; standard coin 
of Tripoli, 338 

Pickaxes, English and American 
prices of, 590 

Pickles, etc., imports, exports, and 
revenue from, 613 

Pig iron, duties on, paid by manu- 
facturers, 611 ; in England, 646 ; 
in United States, 647 ; relative 
prices in both countries, 647 ; 
who pays duties on, 647; colonial 
export of, encouraged by Eng- 
land, 647 ; protective policy of 
Great Britain contrasted with 
low duties in America from 1800 
to 1846, 648 ; effects of, 649 ; 
world's production in 1883, 650 ; 
production of in United States 
from 1860 to 1883, 651 

Piracy, directed by statesmanship 
and aided by American sub- 
serviency, scores a net gain by 
the destruction of American 
carrying trade, 663 

Pitch, 520 

Pittsburg, glass manufacture in, 
639, 640, 643 

Planes, English and American 
prices of, 590 

Plated ware, export, import, and 
revenue, 610, 613 

Pleasure and Pain, economics 
treated as a theory of, 94 

Plows, American inventions in, 
264 ; labor saving, 264 ; superi- 
ority of American in foreign 
markets, 596 

Plumbers' brass ware, American 
export of, 596 ; prices reduced 
by tariff, 621, 622 

Plural voting, on local taxes, 478- " 
479 

Plutology, 7 

Poland, partition of, less injurious 
than free foreign trade in Tur- 
key, 490 

Police, of China, 537 

Political economy, defined, 1-9 ; 
causes of its declining influence, 
9 ; conflicts in, 1-9 ; influence of 



GENERAL INDEX. 



151 



Carey and American school on, 
16 ; relation of to ethics and 
jurisprudence, 18 ; mercantile 
school, 18 ; relation of, to ethics, 
22 ; practical, where studied, 
36-40 ; of the wages question, 
287-303 

Politics, of India. 66 ; of United 
States, 66 ; of German social- 
ism, 91, 301 ; of internal im- 
provement as advocated by 
American statesmen, 150 ; of 
American railways, 150-160 ; in 
France, 403 ; Russia and China, 
404 ; England, 411 ; in United 
States, 418^29 ; of Indian em- 
pire, 483-488 ; of the Irish ques- 
tion, 494-499 ; of Germany, 524; 
of Russia, 526 ; of British 
colonies, 530-533 ; ignorance of 
western nations concerning poli- 
tics and economics of China, 
548 ; of Democratic party in 
United States in 1854 to 1858 
concerning free foreign trade 
and slave home labor, 553 ; pro- 
tectionist claim that the domestic 
production of an article employs 
more domestic labor than its im- 
portation, not fairly met by 
Jevons, 560 

Poll tax, 453, 463 ; of China, 545 

Poor, state care of, 431 ; cost of in 
England, 478 ; what the poor 
most need to sustain wages, 625 

Population, Malthus on, 16 ; 
feebler and more perishable 
class may endure in cities, 
121 ; increase of, in colonies, 
140 ; predictions of, in United 
States, 145 ; future, 145 ; chart 
of, 146 ; increase of. with wages, 
169 ; inefficient, delinquent, and 
incompetent survive most easily 
in cities, 219 ; earth's capacity 
for, 229; Malthus' law, 230; 
means of subsistence increase 
faster than, 234 ; relation of, to 
rent, 237-241 ; view^s of Smith, 
Ricardo, Carey, Bastiat, Mill, 
Roscher, Locke, and Fontenay 
on rent and population, 238- 
242; ratio of capital to, lixes 
the wages fund, according to 
Cairnes, 290 ; alleged tendency 



of, to increase with rise of 
rewards of labor, 292 ; is popu- 
lation a check on wages? 295 ; 
diminishing population has no 
economic tendency to increase 
wages, 320, 321 ; fluctuating 
population increases crime, 442 ; 
moves toward protective tax- 
ation, 473 ; of England in 1882, 
479 ; under the sway of Great 
Britain, 483; increase of, in Ire- 
land under protection, 492; pro- 
portion in towns in France, 497; 
under the ZoUverein and in 
modern Germany, 515; of Brit- 
ish Empire, how distributed, 516; 
of China would be reduced and 
scattered by a disruption of 
Chinese industries by substitu- 
tion of English, 536; of China as 
indicated by size of army, 537; 
exaggerations concerning popu- 
lations easily exposed, 538-541; 
opinions of Malte Brun, Sir 
G. Staunton, R. M. Martin, J. 
R. McCulloch, De Guignes, John 
Francis Davis, Dr. Medhurst, 
Dr. Morrison, S.Wells Williams, 
Marco Polo, Adam Smith, Behm 
and Wagner, Minister Seward, 
and S. Aug. Mitchell, concern- 
ing Chinese i^opulation, 538-550; 
probable actual population of 
China, 547; ignorance of western 
nations concerning population of 
China, 548; population, may be 
attracted by protection, 566 ; of 
Great Britain and Ainerica in 
1788, 646 ; moves from free 
trade to protection, witness 
American sliips and English 
farmers, silk weavers and wool 
growers, 682 

Porcelain, tax on manufacture of, 
455 ; in France, 502, 503 

Pork, revenue on, paid by im- 
porters, 586 ; exports, imports, 
and revenue, 610, 613 

Porter, duty on and export of, 
610; import of and revenue from, 
613 

Porto Rico, trade with, 600 

Portugal, ornaments of the people, 
331 ; monetary unit, 338 ; al- 
leged bankruptcy of, 448, 516 ; 



^58 



GENERAL INDEX. 



English treaties with, 500 ; bal- 
ance of trade with, 600 ; woolen 
industry ruined by taiiff treaty, 
670 

Post office, revenue from, 480 ; 
British post office on the cost of 
sending ocean mails, 657, 658 ; 
American post office, 664 

" Post hoc ergo propter hoc," 703- 
706 

Postage, subordinate to subsidies 
in English, French and German 
ocean mail service, 657-664 ; 
supreme in American non-ser- 
vice and dis-service, 658 

Potato, revenue on imports of, into 
United States paid by importers, 
585, 586, 591; imports and ex- 
ports of, and revenue from, 610, 
613 

Potato rot, in Ireland, causes of, 491 

Potash, protected in United States, 
but exported, 610 

Pottery, effect of import of from 
England into India, 66, 67 

Pound sterling, 338; varioush^called 
sovereign, double angel, unite, 
broad, and guinea, 340-341 

Poverty, relation of to crime, 33, 
42; abolition of .would be wealth, 
75; caused by war in France, 70; 
function of, as spur to service, 
77, 78, 89; how affected by mon- 
opoly, 130; essential to existence 
of wealth, 201 ; is the true oppo- 
site of capital, 211; rarity of ex- 
treme, 216; consistent with hap- 
piness, 216; the poor survive best 
in compact populations, 219; is 
greatest in countries of least cap- 
ital and fewest monopolies, 227; 
poorer countries use a currency 
of silver, 339 ; periods of poverty 
and distress,and causes, 382-386; 
throughout United States in a 
free-trade period relieved by 
soup-houses, 386; poverty not a 
feature of the depression of 1873 
to 1879; influence of poverty of 
the whole or a class in shaping 
government, 402; what the poor 
pick up in streets of Paris, 122; 
poverty and crime, 441; salt, tax 
on in India, 455; cost of poor in 
England, 478; poverty of Hindoo 



people, 486; of Germany under 
free trade prior to 1827, 515; 
suffering poverty prevented in 
Russia largely, 526 ; relieved 
within the family in China, 552; 
the extra dollar removes, 583 ; 
unfavorable to invention, if 
excessive, 597 ; during cotton 
famine in England, 690 

Powder, gun, exports, 610 ; im- 
ports and revenue, 613 

Power, love of, as a motive in gov- 
ernment, 455 ; cotton as a power 
in politics, 688 

Power loom, invention and effect, 
681, 685 

Predictions, fallacious and sound, 
373, 374 

Premier, 453 

Pi-esident, of United States, pow- 
ers of, 417; mode of election de- 
signed by the Constitution, 418; 
how it was ignored and disused, 
419; effect of such departure the 
convention system and direct 
vote, 420, 421; evils and anoma- 
lies incident to it, 421, 422; the 
few who select are not the con- 
stitutional few who were intend- 
ed to select, 423 

Prices, law of rise in, by diminished 
production, 95; Jevons, Thorn- 
ton, Tooke, Chalmers, Carey, 
and agricultural reports on, 
96 ; relation of, to value and 
utility, 94-100 ; markets deter- 
mine, 94-114; freedom necessary 
to fair, 102; as made in grain 
and stock markets more econom- 
ical than privately made, 108, 
109; not regulated by cost of pro- 
duction, 110; but by dividing ad- 
vantage, 111; exaggerated state- 
ments attributing high prices to 
protection which were due to 
wars and affected all prices and 
all countries, l:f2; chart of prices 
of grain and flour in England, 
France, and America, 112, 124; 
Tooke on effect of scarcity on 
prices, 113-117; effect of war on, 
113; seasons, 113; rapidity of cir- 
culation, 114; Carey on prices 
and freedom, 121; countries of 
high and low prices, 122; of land 



GENERAL INDEX. 



759 



in United States, 145; arc condi- 
tions of ijroduction, 167-181; af- 
fected ultimately by cost, 220; 
by war, 221; by nearness of con- 
sumers, especially of bulky pro- 
ducts, 252-263; prices for labor 
must be higher where greater 
freedom is to be maintained, 315; 
of coins, 340; affected by volume 
of money, 343; relation of to cri- 
ses, 371-375; of provisions, 372; 
effects of war on, 380; and of 
prices on prosperity, 380; chart 
of prices from 1790'to 1880, 380- 
381 ; prices follow volume of cur- 
rency,387 ; chart of prices and cir- 
culation from 1834 to 1864, 387; 
falling prices cause cessation of 
production and hard times, 390- 
393; stimulated by government 
loans, 449; of sugar in Paris un- 
der Napoleon, 503; low prices of 
beet sugar in 1884, 506; prices 
of Canadian exports to United 
States, how affected by tariff, 
532; breadstuffs not reduced in 
price by repeal of corn duties in 
England, 558; protective duties, 
if wisely laid, never need repeal 
in interest of prices, 563; their 
effect on price repeals itself 
through home competition, 563, 
564 ; made more even under 
protection, 570 ; cheap goods 
mean cheap human labor, unless 
they are the product of macliin- 
ery, 583, 584; jn-ice not affected 
by the duty where the domestic 
production is adequate to supply 
the domestic demand, 585, 586, 
615; duty cannot in many cases 
be added to the price, and in all 
such cases it comes out of the 
profits of producer, 587, 588; ex- 
ample in cutlery, 587; of Eng- 
lish and American iron and steel 
war(!S in 1882, of steel rails, fall 
in, 590; laAv of the ratio of whole 
supply to the whole demand ap- 
plied to the effect of tariff on 
prices, 591, 592, 593; repeal of 
revenue duties on coffee in United 
States did not produce equivalent 
fall in, 600; on breadstuffs in 
United States not affected by 



duty; prices during silk and 
moris multicaulis mania in 
United States, 632; of pig, and 
iron and steel rails in United 
States from 1860 to 1883, 651; 
extraordinary price of fine wool- 
ens in ancient Rome, 669; high 
]n'ice on merino wools and sheep 
in United States, 676; why the 
duty on wool does not raise its 
price by amount of duty, and 
under a sufficiently ample pro- 
duction not at all, 678-680; of 
foreign and domestic wools com- 
pared, to show that duty is not 
added to American price (see 
chart of prices), 679, 680, 681; 
effect of abundant production on 
(cotton), 687; economy of a rise 
in prices due to a lessened sup- 
ply, 689; in cotton famine of 
1861-5, 689-691; of quinine be- 
fore and since the supersedure of 
American by foreign manufac- 
ture, 692 

Priesthood, power of socially, re- 
flected in state, 413 

Primogeniture, 144 

Printing, wages in England and 
America, 582 

Printing presses, export of, 610 

Private purposes, defined, 702, 703 

Problems, can abundance promote 
ultimate poverty, and scarcity 
ultimate gain ? see Tooke on, 
116; of national debts, 447-451 

Producers, when protected without 
rise in prices, 609 

Production, as related to trade, 6; 
cost of production as a cause of 
value, 11; social and moral ef- 
fect of, 41-54; decreased affects 
prices by what law, 95; cost of 
does not regulate price (Tooke), 
114; but past and present price 
determines how much cost can 
be expended in future, 115 ; 
scarcity sometimes has effects 
like those of, 116; domestic pro- 
duction and money cost, 124; 
and monopoly, 130; how affect- 
ed by distribiition of land, 140; 
no production of forests, 148; 
begins with appropriation, 162- 
166; depends on capital, 167; 



760 



GENERAL INDEX. 



and on prices, 169; and on sub- 
ordination of wills and obedi- 
ence, 182-188; which, and not 
muscular effort, is the essence of 
labor, 183-188; laborer 'produces 
only his wages, 187; involves 
opposing distributions of wealth 
and of products, 196; reproduc- 
tive wealth only the subject of 
avarice, 206; humanity of large 
accumulations of means of, 205- 
210; on bonanza farms, 219; cost 
of wheat production, 219; of 
bread, 220; of iron, 220; by 
small copital, 222; annual, in 
United States, 224, 229; capacity 
of the earth for, 230; rate of pro- 
duction of man and his food, 
231 ; productivity of capitals ap- 
plied iy wholly distinct fact from 
fertili'jy of soils, 238; production 
implies subordination, and is a 
government of interest, 307-309 ; 
but is a partnership affair in the 
division of the product, 309-815; 
on a small scale can seldom be- 
gin in free competition with pro- 
duction on a large scale, 319; by 
women, 325-328; rate of produc- 
tion may increase during war, 
380 ; but diminishes with falling 
prices, 390-393; steered into new 
channels by crises, 395; which 
minimize the pain of failure by 
making it general, 396; mental 
qualities which promote success 
in, 400; are war and army ex- 
penditure productive? 438-440 ; 
share of product taken by taxes 
in ancient Rome, Gaul, China, 
454, 455 ; production of commod- 
ities and values are inverse, 465; 
of beet sugar in France in 1875, 
505; large production of iron and 
steel in America the shortest 
road to low prices, 509; cost of 
production includes import du- 
ties, if no other than the dutied 
market exists, 532; production 
doubled by protection as com- 
pared with importation, 560 ; 
production should not be sacri- 
ficed to revenue, 563; produc- 
tiveness of protective tariffs as re- 
spects revenue, 469-472; produc- 



tion at lower labor cost may be 
at higher money cost, 574; of 
glass in United States from 1790 
to date, 642-644; per capita of 
woolen goods in United States, 
683; of iron, steel, railways, etc., 
in United States, 651; of pig 
iron, steel, and coal in world, 
650; of ships and steamers as 
affected by subsidies, and by 
protection to iron and steel, 651- 
664; of cotton and woolen goods 
in Canada, 668; of sheep, wool, 
and woolens in all countries, 668- 
683; tariffs do but little to regu- 
late the quantity produced, but 
much to determine the place of 
production (quinine), 692; pro- 
duction of shoes in facto- 
ries in United States, 697 ; do- 
mestic production, how aided by 
tariff, 609-629; of silk and silk 
goods, history of, 631-637; of 
glass, 636-644; of iron and steel, 
644-652; tables and chart of iron 
and steel production in United 
States and Great Britain from 
1860 to 1883, 652-653; protection 
the prevailing policy of Europe 
since Napoleon and Frederick, 
675 
Profit, sometimes greatest on small 
crop, 116-119; in railways, 155; 
the inducement to employ labor 
is, 168-194; risk earns it, 186; 
rate depends on time as well as 
price, 191-194; charity is a 
subtle form of, 204; of peace, 
211; small capitals earn large 
rates of, 222; causes of high, 
229; do not decline in the new 
fields, 229-230; defined, 238; is 
there an ordinary rate of, 238; 
profit-sharing in farming, 268- 
272; profits the mother of 
wages, 293-316; rate of, the 
measure of success of industry, 
293; the source of wages, rent 
and interest, 294; steer industry 
and energize labor, 294; views 
of Smith, Walker, Cairnes, 
Atkinson; what qualities favor 
profit-making and aid the work- 
er to become an employer, 307; 
how all industry is profit-shar- 



GENERAL INDEX. 



rei 



ing, 311-315; is intended profit- 
sharing better than the involun- 
tary '? "314; profit of sustaining 
bi-metallism, 365; if successful, 
365; great public improvements 
that yield no profit may produce 
financial crises, 379; declining 
profits stagnate labor and pro- 
duce suffering, 390; rate of 
profit measures' the social neces- 
sity of industries, 397; in the 
economic sense, 397; desire of 
profit controls all social organ- 
ization and rt^ciprocal useful- 
ness among men, 400; relative 
prospect of, in loans to govern- 
ment and investments in pro- 
duction, 449; making a profit 
out of being taxed, 463; profits 
of trade maj^ be a form of taxa- 
tion, 483-491; salaries and bribes 
as profits of conquest, 480; mer- 
cantile profits of Indian trade, 
486; Englishmen's profits the 
basis of the act of union, 493; 
profits small in Germany, 516; 
sometimes lessened by necessity 
of paying duties on the product, 
532; profit of working under 
protection is offset by losses of 
initiating a new industry, so as 
to equalize the chance of profit 
in protected industry with 
that in business of other kinds, 
565; Sidgwick on, 565; the profit 
argument for free trade applied 
to protection, 576; American in- 
dustry ahvays less profitable 
than it might be, so long as it ex- 
ports raw cotton, breadstuffs 
and provisions, instead of first 
working them up into finished 
cotton goods (Jefferson), 598; 
profits during moris multicaulis 
mania in United States, 632; 
profit of growing cotton dates 
from cotton gin, 686; affects the 
profit of growing slaves, 687; 
profits of cotton manufacture, 
rule English politics, profits of 
growing cotton did for 40 years 
rule American, 688; w^ages arc 
paid no longer than profits exist, 
690 
Prohibition, of imports of calicoes. 



chintzes and muslins by England 
in 1700, 489; between Holland 
and France in 1671, 501; of new 
vineyards in France, 502; of im- 
ports of iron and steel wares 
into United States from 1790 
would have brought cheap- 
ness and abundance, 650; great 
political and social econo- 
my of, 650; applied to for- 
eign vessels from taking 
part in coasting trade, 
652 

Proletariat, small in France rela- 
tive to employers, 496 

Property, effect of land becoming, 
138; according to Adam Smith, 
288; social uses of private, 304; 
as a qualification for voting and 
holding ofiice in England, 479; 
and income tax, amountjof in 
England, 479; in land in India, 
488^ in New Jersey and New 
Yprk, 488 

Protection to industry, 17, 121-124; 
distinction between importing 
competing products and com- 
peting producers, 314; the 
former displace labor without 
increasing demand, 314; the 
latter adds to the demand as fast 
as to the supply,315; protection 
to indiistry in United States in- 
volves an obstruction to equal- 
izing American labor market 
with foreign, 315; military 
protection to foi'eign trade, 316; 
natural protection, 319; exists as 
to all non-importable products 
and services, 319 ; protected 
classes, 320; it protects prices 
of raw materials to export only 
finished products, 322; tariff of 
1824-8, 382; natural and artificial 
facilities, 382; rat« of duties 
under, 383; overwhelmed by ex- 
cessive imijortations, 384; failure 
of a government to be loyal to 
its own people in industrial 
matters may cause crises, 307; 
power to levy tariffs essential to 
national unity, 416; protective- 
ness of a nation's policy involves 
stud}^ of local as well as general, 
and army and colonial as well 



762 



GENERAL INDEX. 



as tariff action, 431; may be 
military, 431; early traces of it 
among Hindoos, 453; protection 
or the prohibition of an indus- 
try the only alternatives if the 
country can produce the article, 
461,462; those who do not live by 
industry are not so directly 
interested in, 463; protective 
tariffs excel free trade tariffs in 
producing revenue, 469--472; and 
also prosperity, 473; protection 
to tobacco manufacturers in 
Great Britain, 480-481 ; to extent 
of prohibiting imports into Eng- 
land of calicoes, chintzes, and 
muslins, 489 ; advance of Ireland 
under, from 1783 to 1800,_ 493; 
not responsible for retaliatory 
tariffs, 500; aims to produce in 
harmony with natural facilities 
and at less labor cost, 511; List's, 
labors in behalf of, in Germany, 
514; division between German 
states in 1818, 514; effect of, on 
relative militaiy strength of 
France and Germany, 515; limit 
and extent of German oppor- 
tunity in Zollverein, 517; applies 
to raw materials as much as 
to finished products, 517 ; in 
Russia, 525-530; in Australia, 
Austro-Hungary, Italy, Servia, 
Houmania, Spain, Mexico, and 
South American States, 530; 
Canada, 531-533; protection in 
India vetoed, 533; absolutely 
crushed out in Chinese tariffs, 
538; and Japanese, 553; vast 
number, variety, and vigor of 
protective statutes in England, 
555; principle of protection in- 
dorsed in part by Smith, Mill, 
Sidgwick, Devas, etc., 555-558; 
doctrine on policy of, ascribed 
by Rogers to Tories, 557; by 
Price to practical men in Ger- 
many, France, United States, 
and Canada, 557, 664; Perry 
regards profanity as essential to 
a scientific elucidation of pro- 
tection, 550; Jevons does not 
meet the protectionist argument 
that domestic production em- 
ploys two home capitals, im- 



portation one, 560; protection 
cannot require more wisdom 
than destruction, 561 ; duty can 
only be protective while it is 
adding another industry, 563; 
same duty may give revenue on 
part and protect against part, 
565; attracts population and in- 
creases national strength (Sidg- 
wick), 566; is natural, 567; Mof- 
fat on, 566-568; Devas's argu- 
ments for, 569-571; justified by 
Roscher, 569; tends to avert 
famines, 570 ; protection doc- 
trine requires low or no duties 
on all products which we lack 
natural facilities to produce, 
573; it puts all duties on prod- 
ucts that compete with what we 
produce, 573 ; Hewitt on our 
natural facilities for making 
iron, 573; free trade not desir- 
able between Canada and Ver- 
mont, 572-575 ; Perry's point, 
"trade profits, or men would 
not trade," 576; trade in the long 
run and the short run, 578; rates 
of wages in America and Europe, 
579-582 ; Wendell Phillips on 
the dollar, 583 ; taxes that enrich 
the consumer because paid by 
the producer, 585-589; Perry's 
vast superstructure of tax wab- 
bles on an "if," and falls, 589, 
590; steel rails not "taxed" by 
the tariff, but reduced in price 
four-fifths, 589, 651; woolen 
blankets not "taxed," 590-079 
(chart of wool prices); iron and 
steel wares not "taxed," 590, 
647, 650; protection to the profits 
of its own producers is that 
which each nation means even 
when it, by sacrificing its farm- 
ers to its manufacturers, calls it 
free trade, 606-608; the five 
points of protection, 609; protec- 
tion promotes unity and peace, 
628-630; relation of, to silk man- 
ufacture in United States, 631- 
634; decline of silk manufac- 
tui'e in England since protection 
was withdrawn, 634-638; intro- 
duction of glass, china, carpets 
and tapestry manufacture into 



GEJSERAL INDEX. 



763 



France by Colbert, 639 ; early 
protection to glass manufacture 
in the United States, 640 ; in- 
duced by Hamilton's report on, 
639; partly protected by friabil- 
ity, 643; greater tariif protection 
to British than to American iron 
and steel manufacture from 1790 
to 1845, 648; disastrous eifect of 
failure to protect iron and steel 
manufacture felt for ensuing 
fifty years on American ship- 
building, 649; American naviga- 
tion laws exclude foreign ves,sels 
from coasting trade, but after 
1816 fail to protect American 
ocean-going vessels in any way; 
653 ; protection by discriminating 
duties and tonnage acts from 
1789 to 1816, 653; growth of 
American shipping under, 653- 
654 -. repealed by treaty, 654; 
and acts of Congress, 654; since 
1862,654; positive effects of pro- 
tective policy on growth of 
American merchant marine, 656; 
results of, in Canada, 664-668; 
history of protective legislation 
in England as to wool, 669-671 ; 
Lord Bacon a prophet of protec- 
tion, 670,671; multiplicity of the 
modes of protection to industry, 
675; Thos. H. Benton favored a 
progressive duty on wool, 676 
Protected classes, 320, 328 
Protected industries,strikes among, 

328 
Provisions, export of, and rate of 
duty on import, 610 ; revenue, 
614 
Prussia, rates of wages in 1867, 
511, 581; proposer of protection 
in Germany, 514, 515, 517 ; 
miles of railway in, 520; advance 
of wages in under protection 
since 1879, 523; rates of wages in 
1869, 581 
Public purposes, defined, 702, 703 
Publishing, wages, England and 

America, 582 
Puddlers, iron, wages in United 
States, Great Britain, Prussia, 
etc., 511 
Pumps, export of American, 596 
Pupjshment, involves economic 



loss, 441; modes of, 444; severity 
lessened, 444; colonization, 445 
Pyramids, and iron, 645 



Q. 



Qualities, in implements the best is 
cheapest whatever it may cost, 
596; of wool, 672 

Quantity, as quantity of certain ex- 
ports increases value declines, 
673 

Quebec, manufactures, 667 

Quicksilver, exports of and duty 
on imports, 611 

Quinine, destruction of manufac- 
ture in United States, by free 
trade, 690-695 

R. 

Race, of immigrants to United 
States, 145; first to use iron, 645 

Rails, iron and steel, production 
and fall of prices, 651 

Railway, travel, safety of, in 
United States, France, etc., 29; 
railways and monopoly, 135 ; 
American, growth of, 150-161; 
Harlem, 151; in England, 151; 
Baltimore and Ohio, 151; Mo- 
hawk & Hudson River, 153; 
Boston & Albany, etc., 153; era 
of consolidation, 155; land grants 
to, 157; areas of, 158; distribu- 
sion of earnings between capital 
and labor, 172-174; shrinkage of 
values, in 1883-5, 190 ; cost of 
moving grain and flour in Amer- 
ica, 220; how controlled by Van- 
derbilt, 220; reducing freights, 
220; rates of in United States, 
from 1868 to 1884, 221; shrink- 
age in values borne entirely by 
capital, 222; profit-sharing in 
railways, 311; strikes on, 328; 
insolvency of American railways 
in 1857 produces crisis in Eng- 
land, 377; excessive building of 
railways, 379; expectations of, 
in 1837, 385; relations of to iron 
and steel industry, 391 ; debts of, 
in United States, 448; effect of on 
imports, 470; loans in India, 
486; mileage of, in Prussia, 520; 



VG4 



GENERAL INDEX. 



aid to railways in Canada, 531; 
effect of premature introduction 
of railways by foreigners in 
China, 547, 551; freights on 
American railways, 584; miles of 
railroad built, tons of iron and 
steel rails made in United States, 
and prices of rails from 1860 to 
1883, 653, 653 

Rank, organization of labor by 
rank, 325; effect of rank and 
grade of life on crime in men 
and women, 443 ; taxed in China, 
455; depends indirectly on iron 
and steel manufacture, 646 

Rates, incidence of, 459, 467; kinds 
of, 477 

Raw materials, prices of, 121; in 
estimating wages, 172-176 ; 
values given to, by diversifying 
industries, 333; distinction be- 
tween raw materials and finished 
product, applies to each product 
singly, but disappears in national 
aggregates,' 671; France protects, 
498; valueless in India where 
manufactures were destroyed, 
488; Germany remained poor and 
weak, while the ' ' granary of 
Europe," 515; production of, 
first protected under ZoUverein, 
517; raw materials may be dearer 
and yet the finished product 
cheaper, 596; so of American iron 
and steel wares, 596; demand for 
raw silk in England falls by 
tliree-fourths under free trade in 
silks, 636; small raw materials 
required for iron and steel manu- 
facture in England in 1790, 646; 
wool a finished product, 671 

Reciprocity, treaty of United States 
with England in 1816 described 
by Mr. Huskisson as a dexter- 
ous swap for England, 655 

Record, debts of, in the United 
States, 448 

Refiners of sugar, ,duties, 618 

Rent, Ricardo's theory opposed by 
Carey, 16 ; causes of, 135-150 ; 
share of produce of land that 
goes to rent, 177; according to 
Smith, Young, rates of on pro- 
ductive real estate, 179 ; how 
compares with profit on capital, 



193; relation of rent to value of 
land, 287, 238 ; Smith's and Ri- 
cardo's views criticised, 239 ; 
depends wholly on location, 239, 
240 ; views of Carey, Roscher, 
Bastiat, Locke, Mill, Fontenay, 
and MacLeod on, 343; defined as 
cost of occupying working space, 
338 ; depends on what facts ? 
338 ; rent balances transporta- 
tion, 847-351 ; economizes pro- 
ductive space to the advantage 
of society, 348-353 ; revenues 
rented in Asia and Africa, 453 ; 
taxes are rent where government 
is socialistic, 453 ; or simple 
bondage, 453 ; the first rent 
would be of mines (iron) for 
manufacture of weapons, 645 

Repeal, of a protective duty can 
never be needed, 564, 596 ; of 
duties on coffee in United States 
raised prices in Brazil, 600 

Reproductive, capital distinguished 
from enjoyable, 163, 305,. 307 ; 
reproductive wealth defined, 316; 
rate of reproduction in man and 
his food, 331 ; investments in re- 
productive wealth, if premature, 
produce crises, 378 

Repu.blic, 131 ; diversity of form 
in, 415 ; departments of in 
United States, 437 ; freedom to 
vote for its officers does not 
lessen their absolute powers, 416 

Residences, regulation of by gov- 
ernment, 435 

Responsible government, defined, 
406; history of, 406-413; dates 
in England from failure of 
George III. to subdue America, 
409 ; developed largely in Vic- 
toria's reign, 410 ; crown repre- 
sents the dignity, cabinet the 
policy, 454 

Resumption, in England in 1820, 
effects of, 370, 871 ; in Russia, 
528; and Uiuted States, 390, 
392, 528 

Revenue, farming the, 453 ; as an 
exclusive object in laying taxes 
belongs to the military period, 
456 ; sources of, in the United 
States, 468 ; most revenue al- 
ways produced by protective 



GENERAL INDEX. 



765 



tariffs, 469-473; from public 
lands, internal revenue, and cus- 
toms in the United States, 475 ; 
in England, from all sources, 
479, 476 ; cost of coUcctinc; in 
England and United States, 482 ; 
drawn in salaries in India, 485 ; 
from land in India, 488 ; of 
Turkey mortgaged, 490 ; of 
France, 495-498 ; of Germany 
and Prussia, 522 ; of Russia, 
527 ; collected in the United 
States on Canadian products nut 
a tax on consumers, 533 ; of 
China, 537 ; tariff for revenue 
only is an impossible chimera, 
561-563 ; duties on imports will 
protect unless domestic produc- 
ductionis forbidden, 562; Amer- 
can government having no power 
to prohibit domestic production, 
562 ; can not levy a duty for 
revenue only, 562, 563 ; a tariff 
for revenue only calls for high 
duties on products we have no 
natural facilities to produce, 573; 
revenue derived from importa- 
tion of articles of which we pro- 
duce our whole supply, 586 ; 
duties so far as they produce 
revenue are revenue duties (Mill) 
587 ; even repeal of revenue 
duties may not always cause re- 
duction in prices by amount of 
dutj-- (coffee), 600 ; portion of 
revenue collected from foreign- 
ers, 623; revenue from silks, 634 

Revolution, agitation for a social, 
304-307 ; tendencies to paternal 
despotism where spirit of revo- 
lution is deficient, 402 ; effected 
ii/English government by Amer- 
ican independence, 409 ; what is 
deemed revolutionary in Eng- 
land, 426 ; loss of life in French 
revolution compared, 447 ; kind 
of industrial revolution needed 
in (Uiina, 551-554 

Revolvers, American superiority 
in foreign trade, 596 

Rhode Island, 141, 252; popula- 
tion of, to cultivated land, 546 

Rial, 340 

Ribbons, England protects her own 
against Irish, 493; decline of, 



when protection against French 
and German gone, 634-637 

Rice, excise on, 481 ; revenue on, 
in United States, paid by foreign- 
ers, 586 ; exports of, 611 

Rice-hullers, American export of, 
596 

Roads, taxed, 454 

Romans, economic conditions of, 
determined their political iustilu- 
ti(jns, 402 ; power first in sold- 
iers and priesthood, then in sold- 
iers and lawyers, then in political 
manipulators of elections, etc., 
402 ; register of revenues and 
expenses, 454 ; tribute derived 
by, 454 ; wool culture and sheep 
among ancient, 608 

Rome, pope of, 404 ; elective, 405; 
mode of choosing, 418 

Rome, ownership in, 23; family 
relation imder Roman law, 60; 
classes which ruled in, 402, 405; 
extraordinary prices of fine 
woolens, 669 

Rose noble, 340 

Rotation of crops, 255, 520; and of 
manures, 520 

Rouble, 338 

Roumania, tariff, 530 

Rubber (see India rubber) 

Rupee, 338 

Ryots, 485, 486 

Russia, markets of, 100; bureau- 
cratic government, 406; value 
of agricultural products of, 230; 
relative wages in, 315; orna- 
ments worn in, 331; monetary 
unit of, 338; political parties in, 
404; local government, 430; the 
mir, 430; expenditure on army 
in, 438; alleged low credit of, 
448; area of, 526; communal 
and land system of, 525-527; 
emancipation, 526, 527 ; home 
industry in, 527; child labor and 
total number of hands employed 
in factories of, 527; Russians 
escape three important forms of 
western taxation, through their 
more practical socialism as an 
aspect of their intenser despot- 
ism, 529; the taxes of emancipa- 
tion (including rebellion), re- 
sumption, and pauperage, 529; 



766 



GENERAL INDEX. 



American balance of trade 
against, 599-601 ; product of 
iron, steel, and coal in, 650 



S. 



Salaries, as a mode of taxation, 485 
Salt, earnings of salt manufacture 
in United States and division 
between capital and wages, 312; 
value given by meat packing, 
322 ; tax on, converts the Hin- 
doos into earthworms, 487 ; Ro- 
man taxes on, 454; Chinese, 455 ; 
heaviest known tax laid on in 
India, 455, 486 ; United States 
revenue from, not paid by con- 
sumer, 586 ; fuller demonstra- 
tion of this point, 693-697 ; ex- 
ports of, 611 ; imports and rev- 
enue from, 614 ; a surplus of 
revenue not a good reason for 
withdrawing protection from, 
640 ; salt production in United 
States as related to tariff, 693- 
697; foreign production as com- 
pared with domestic in use, 693; 
693 ; prices, duties, and manu- 
facture South and North, 694, 
695; from 1868 to 1872 duty 
was added to price, from 1872 
to 1876 it was divided, since 
1876 it has been paid entirely by 
importers (diagram), 696. 
Sausage machines, American ex- 
port of, 596 
Savages, absence of money among, 
331; schemes of converting by 
raising silkworms, 631 
Savings banks in United States, 

190 
Savings, taxes on, 464 
" Saw gin," Whitney's, 686 
Saws, wages in manufactui-e of, 
581; English and American 
prices of, 590 
Saxe- Weimar, 515 
Saxony, wages in 1867, 511, 515; 

wools of, 672 
Scales and balances, exports, 611 
Scarcity, effect of on prices, 115- 
119; of savage life, 162-166; of 
crime during great wars, 443; 
the scarcity and abundance so- 
phism of Bastiat, 508 



Schools of political economy, 9-36; 
of Carey, 16; schools sustained 
by taxes under universal suf- 
frage, 474; in Prussia, 523 

Science, is political economy a, 1-9; 
classification of, by A. Comte, 
6; the scientific method in polit- 
ical economy, 23; how economy 
made exact (Jevons), 34; Perry 
says the facts are too numerous, 
whirling and entangled, 571 

Scissors, American export of su- 
perior, 596 

Scotland, union of with England, 
340, 461; taxes in, 476; prohi- 
bition of culture of tobacco in, 
480; lessened product of bread- 
stuffs under free trade in corn, 
559; production of tobacco pro- 
hibited in order that import duty 
may not protect, 562; oiu- bal- 
ance of trade with, 599-601; ear- 
ly protection to glass, 639 

Seasons, effect of bad seasons to 
destroy agriculture counteracted 
by protection to corn in Eng- 
land, 113-118 

Secession, war for in United States, 
could it have been averted? 
438 

Seed, tax, 466; export of (liay and 
cotton) seeds, 611; import of 
flax, hemp, etc., 614 

Senate of United States, 414, 426 

Servia, government parliamentary 
and responsible, 407 

Sewing machines, American ex- 
port of, 596, 611 

Sex, in crime in Gi'eat Britain, 33; 
imposes no material obstacle to 
directon of industry if the value 
sense exists, 307-308; women as 
wages- workers, 325-328; does 
their best welfare lie in giving 
them a broader claim to support 
at the hands of male relatives, or 
a freer admission to compete for 
wages? 325; limitations on wo- 
man as a worker, 326; degree in 
which they are self-supporting 
in United States, adherence to 
the family order, 327; the work- 
ers find their real underbidders 
in the " ladies," who work or 
not as they choose, and 



GENERAL INDEX. 



^6^ 



hence help to fix woman's work 
nearer the gratuitous standard, 
328; sex and crime, 441, 442; 
in worli in France, 497; in Ger- 
many, 524; in strilies, 328 

Shearing frames, 681, 685 

Shears, cast steel, English and 
American prices of, 590 

Sheei?, taxed in Turkey, but im- 
ports and aliens free, 488; in 
France, 498; antiquity of sheep 
culture and history of, 668-683; 
development of, 671; may be 
bred to any pattern, 671; high 
prices on merinos in America, 
676; growth of sheep and yield 
of wool in United States, 
677 

Sheetings, 383, 666 

Shillings, 339, 341 

Ships, building and repairing of in 
United States, low returns to 
capital and large to labor in, 313; 
English ships needed protection 
until they could carry cheaper 
than all others (Mill), 557; wages 
in, in America and Europe, 581 ; 
American ships came under free 
competition in 1816, 642; ship- 
building dependent on iron and 
steel manufacture since 1845, 
648; British ships protected by 
discriminating duties on iron 
carried in them, 648; canvas 
and cordage for, 652; rapid 
growth of shipping while under 
protection in United States, 653, 
654, 656; national quality of 
ships and right to protection, 
654; free ships would put an end 
to ship-building, 655; decline of 
American ocean-going marine 
because unprotected itself and 
dependent on iron and steel 
manufactures, also unprotected, 
656; while English iron and steel 
industries were got ready for 
ship-building by persistent pro- 
tection, 640; subsidies to English 
ocean-going vessels, 659, 662, 
663; denial of subsidies to Amer- 
ican ocean-going' vessels, 657, 
658; American penny-wise mean- 
ness t(jward ships enables Eng- 
land to score a handsome net 



profit on her piracy over all costs 
of indemnity, 663 

Shoddy and rags, in Yorkshire, 
122; in English blankets, 590, 
672 

Shoemakers' tools, American ex- 
port of, 596 ; productions of in 
United States, 697 

Shoes, export of from New Eng- 
land, 35 ; law governing price of 
in exchange with corn, 97; strikes 
in, 328; protected in 1824, 383; 
women's shoes exported from 
United States, for one hundred 
years past ; magnitude, value, 
and cheapness of New England 
shoe trade, 697, 698 

Shovels, English and American 
prices of, 590 

Siberia, tribal ownership in, 23 

Sidon, 453 

Silesia, wools of, 672 

Silk, early culture of, in America, 
631 ; visionary economic views 
concerning, 631 ; colonial export 
of raw, 631 ; revival of in 1826, 
and silkworm mania, 632, 633; 
manufacture of, in United States, 
sharing of product in, 313; Eng- 
lish silks protected against Irish 
by Act of Union, 493; taxes on 
manufacture of, in China, 455; 
decline of silk manufacture in 
Turkey, 491 

Silks, French imports and exports 
of, 26 ; Belgium, 26 ; manufac- 
turers of Bengal petition for 
same protection against English 
silks as England exacts against 
theirs, 487 ; former repute of 
Turkish silks and velvets, 490; 
in France, 500-503 ; statutes in 
aid of silk manufacture in Eng- 
land, 555 ; wages in silk hats in 
America and Europe, 581 ; Eng- 
lish silks protected against Irish 
by Act of Union, 493; decline of 
the tariff tax on silk though the 
duty remains the same, 620, 621 ; 
manufacture of in America, 
growth of value of product, 633; 
a consequence of protective 
duties, 633 ; decline of manufac- 
ture in Eugland under free tniilc, 
632; proportion of silk mauufac- 



iGS 



GENERAL INDEX. 



ture to Great Britain's entire 
manufacture (McCulloch), 637 ; 
McCulloch's attempt to ' ' explain 
away" the destruction of the 
English silk manufacture by 
free trade, 637, 638 ; imports of 
into United States from France 
and Germany, 637; former rivalry 
between England and France in, 
637 ; scarf of silk in Coeur de 
Leon's contest with Saladin, 646 ; 
fibi'e of compared with wool, 
673 

Silver, in India, 331 ; the money of 
the poor, the retailer, the laborer, 
and of vital consumption, 339 ; 
in England, 399; relative quantity 
used, 344 ; has free coinage, and 
is standard in India, 362; in Ger- 
many, 363; elfect of cessation of 
drain to India accurately foretold 
by Meggins prior to 1770, and 
verified in 1873, 373 ; export of, 
where it subtracts from circula- 
ting medium, 383, 384 ; Ameri- 
can interest in Chinese trade, 
536 

Simplicity, as a cover for indolence, 
571 

Skill, influence of on wages, 313 

Slaughtering and meat packing in 
United States, relative wages 
and profits, 313 

Slavery, associated with tribal 
ownership, 23 ; and pauperism, 
30 ; relative prosperity of free 
and slave states partly due to 
race capacity, 33 ; in United 
States by census, 146 ; slavery 
abolished by substitution of 
wages for force, 164 ; servants, 
provision for, 166 ; change of 
opinion concerning slavery with 
growth of freedom, 333; relation 
of to free trade and the secession 
movement of 1833-33,678-679; rise 
in price of slaves due to success of 
cotton, 384; in civilization is suc- 
ceeded by penitentiaries, 444; 
slave labor and free trade parts of 
the same scheme of propagand- 
ism in United States, 553, 687 ; 
profits of cotton-growing and 
slave-growing combine to make 
slavery a power, 687; the slavery 



struggle in America an economic 
war, 688 

Smiths, 383, 511, 646 

Smuggling, between England and 
France exceeded legitimate trade 
in 1774, 500; right to smuggle in 
China and Japan backed by 
British forces, 554; in New York 
it is effected by agents of foreign 
houses (Wells and committee of 
Congress), 605 

Soap, England protected her soap- 
makers, but gave the Irish free 
soap by Act of Union, 493 ; ex- 
port of, 611 ; import of and reve- 
nue from, 614 

Socialism, theory of tribal or com- 
munal ownership should be 
studied, liow, 83 ; state socialism 
and wherein all state life is social, 
57, 60; what is social wealth, 63- 
65 ; social view of title, 135-150; 
Henry George's scheme of land, 
135, 130 ; disappears as to title 
with advances of society, but in- 
creases as to use, 130-151; culmi- 
nates in slavery, 138 ; socialistic 
tendencies of taxation, 145 ; aid to 
railwa.ys and reaction against, 
145-161 ; railway theoi'ies of 
socialism, 160; argument of, as to 
capita], labor, and wages, ex- 
ploitation and robbery, stated and 
answered, 167-185; Mill's quasi- 
socialism, 185 ; the socialist ob- 
jection to accumulation ans- 
wered, 198-310; Karl Marx, 309; 
social saving by private enter- 
prise, 318 ; poor survive best in 
cities, 219 ; social gain by large 
capitals, 330 ; social use of re- 
productive wealth, 234 ; Bastiat 
on socialism, 334 ; objections of 
socialists to large landholding, 
373 ; socialist views of labor dis- 
cussed, 304-330 ; destruction of 
values by strikes, 310, 338 ; doc- 
trine that returns to capital are 
a robbery of labor is subversive 
of all social order, and tends only 
to destroy industry, 307 ; wages 
of social' labor, 333; tendencies 
of local government to socialist 
undertakings, 477-479; socialism 
of the Russian mir and artel. 



GENERAL INDEX. 



769 



526 ; in Russian finance, 528; 
Russian socialism in two aspects 
exceeds that of western nations, 
529 

Sociology, relation of to political 
economy, 7 

Soil, exhaustion of, 253-256 ; re- 
lation of protective policy to, 
570, 571 ; would first be used for 
making iron, 645 

Sol, monetary unit of Peru, 338 

Soldiers, erroneous statistics of in 
France under Napoleon III. , 30 ; 
health of British soldiers serving 
abroad, 31; of recruits in France, 
32; bounty laws in America, 145; 
wages of, 290; hold the power at 
first, 402 ; cost and functions of, 
437-440; relation of to industry, 
440; soldiers for sale in Germany 
while export raw materials, 515; 
expenditure on soldiers inFrance, 
497 

Sophisms, of Mill as to protective 
duties producing no revenue, 
469-472 ; may apply to a theory, 
but not to a practice, hence to 
free trade but not to protection, 
507 ; of Bastiat criticised, 506- 
513 ; of Perry as to paying for 
foreign products with domestic 
and trading for profit, 571-577, 
578 

Southern States, effect of war of 
1861-5, 415, 687, 688 ; in salt 
making, 694 

South Carolina, in 1828 to 1837, 
384,629, 630; silk raising, 631 

Southdown wools, 672 

Sovereigns, 340-342; pound ster- 
ling, 340 

Sovereignty of United States with- 
in its powers, 415 ; sovereignties 
merged in Germany, 522 ; of 
China and Japan undermined as 
to tariff, 533, 534 

Spain, 214 ; monetary unit of, 
338 ; government responsible, 
407 ; debt of, 448; order des- 
trojang vines and olive trees iu 
Mexico, 480 ; taria' of, 530; Am- 
erican balance of trade against, 
600 ; product of iron, steel, and 
coal, 650; wool and woolens, 008, 
669; wools of, 672 



Spai'ta, causes of its peculiar state 
life were economic, 402; iu'islo- 
cralic, 405 

Specie, import and export of, 
383; turned, 384, 386; resump- 
tion of, 529 

Specific duty on tobacco, con- 
verted into ad valorem, 481 ; 
nearly all duties specific under 
Zollverein, 517 ; on glass in 
United States, 644 

Spinning jenny, 681, 684 ; spin- 
ning frame or throstle, 684 

Spirits, 480, 481, 482 ; export of, 
611; import and revenue, 614 

Spirituous liquors, annual value 
of, consumed in United States, 
25; taxeson, 463, 464; effects of , 
475 ; how methylated for use iu 
arts, 476 ; English revenue from, 
480, 481, 482 

Spiritual government, 428 

St. Petersburg, 351, 405 

Stamps, revenue from, 479, 482; 
in India, 486 

Standard, silver, and later gold 
in England, 334; coin, 335, 336; 
in United States, 336 ; nine 
meanings, 342 ; single and 
double, on, 361; Beaconsfield on, 
362 

Starch, Act of Union gave Ireland 
fi^e starch, England protected 
starch, 493 ; export of from 
United States, 611 ; import and 
revenue, 614 

State, control of railways by, 29; 
origin and functions, 131-151 ; 
aid to railways iu United States, 
150-161 ; decline of cost (value) 
and increase of utility of the 
state as society advances (Elder), 
324; state, like the family or the 
basic qualities of human nature, 
is a necessity, and natural, 392, 
393; the government of interest 
known as industry or business 
is more searching, minute, and 
controlling than the political 
state, 399; it is an unconscious 
government, 400; form of the 
state determined by the material 
conditions of the people, 402- 
404 ; state as a mechanism 
much alike in its essence and 



110 



GENERAL INDEX. 



form, whatever its mode of selec- 
tion, 404-415 ; parliamentary 
and representative states, 406; 
responsible ministry and dis- 
soluble legislature, 407-412 ; 
Roman state, 413 ; what forces 
state must represent, 413; " con- 
curring majorities " according 
to Calhoun, 414; relation of in- 
dustrial to political, 431 ; the 
state as wise as its average con- 
stituency only, 441; objects in 
punishment, 440; state debts in 
United States, 448 ; loans to, 
448; effect on tax policies of 
state becoming a producer, 456 ; 
subjects of a state do not pay all 
its taxes, 457 ; state taxation in 
United States, 468; functions of 
in England shown by diversity 
of local rates, 477-479; state aid 
to railways in Canada, 531 ; 
state aid to silk culture in United 
States, 631-633 ; state aid to 
glass-making in Massachusetts, 
639; state is the sum of all in- 
trinsically profitless but socially 
necessaiy industries, 700, 701 ; 
and hence merges into identity 
with protection, 700, 701 
Statesmanship, its relation to polit- 
ical economy, 8, 17; American 
examples of, 38; state dt^flned, 
131; statesmen assume the basic 
qualities of human nature as 
constant factors, 398 ; forms 
through which it works in Eng- 
land, America, France, etc., 
406-429 ; class who supply work 
for statesmen, 447 ; statesmen 
should know whether a tax pro- 
duces revenue and prosperity, 
465-469, 469-473 ; as this is a 
practical matter, but need not 
know its final incidence, which 
is a metaphysical subtlety, 459- 
460 ; statesmanship of Russia in 
emancipation, 527; of Germany, 
514-523; of colonial and Cana- 
dian independence, 531; Chinese 
statesmanship as to subversion 
of native industry by foreign pro- 
cesses prematurely introduced, 
548; American statesmen over- 
I'eached and out maneuvered by 



English from 1815 to 1860inmat- 
ters relating to carrying trade 
and ocean ships, 640-664; de- 
struction of American merchant 
marine an intended stepping- 
stone to disunion, 657, 658; of 
Sir John A. Macdonald, 664; of 
Colbert in France, 673, 674; 
artisans, how attracted, 674; 
blunder of French statesman- 
ship in 1786, 674; triumph of 
Napoleon's protective policy in 
Europe, 674,675; statesmanship 
of America holds protection to 
be the surest road to cheapness, 
683; of Great Britain sacrifices 
domestic production to foreign 
trade, 689 
Statistics, definition of, 24; phil- 
osophy of, 24-40 ; Cossa's fal- 
lacy as to, 24; what they show, 
24; fallacious handling of, 24- 
26; conflicts of, as between dif- 
ferent nations, 26-28: may be due 
not to error but to different 
classification, 27 ; as to silks, 
coal, wool, hops, glass, 28; of 
china discredited, 29 ; military 
under Napoleon III., 30 ; of 
the poor prove relief onljr and 
not poverty, 30 ; of eccentric 
marriage, 30; of health and cli- 
mate, 31 ; crime, 32, 443, 444; 
taken with a bias, 33; accurate 
predictions of population, 145 ; 
of grain production, shortage and 
effect of in United States, 1879- 
1883,106,117;Mongredien's errors 
concerning causes of dear bread- 
stuffs in England, 112; during 
Napoleon wars, 112-113 ; chart 
showing that fluctuations in 
America and France were iden- 
tical with those in England, 124; 
of repeal of corn laws, 119; of 
immigration into America, 141- 
150; chart of, 147; of forests in 
United States, 148; of beginning 
of railways, 152-157; land grants, 
157, 158; of division of product 
between capital and labor, and 
of division of capital fund be- 
tween rent, interest, profits, 173- 
182; of economy of large capitals, 
219-230 ; of relative capacity 



(GENERAL iNDEX. 



7V1 



of reproduction as between man 
and his food, 230-234; of ratio 
of rent to value, 244 ; of rent 
and transportation as balancing, 
250-252 ; of diminution in value 
of products by distance from 
markets, tax of transportation, 
252 ; exhaustion of soils and 
contra, 254; of ratio of farm in- 
comes, farm values, and farm 
wages to nearness of consumers 
(Dodge), 256-262; of agriculture 
by machiner}'-, 263-267; of large 
landholders in America and 
England, 268-374; of depopula- 
tion and waste of Ireland, 274- 
275; of emergence of food plants 
into general use, 275-280 ; of 
cost and economy of strikes and 
lockouts, 310, 328; of division 
between capital fund and wage 
fund in America, 311-314; of 
women who labor, 325-328; of 
value of standard coins, 338; of 
fineness of British coins, 340- 
342; of all coins and paper in 
use, 344; of export of bonds, 
340; of turning from silver to 
gold in Germany, 362; of rate 
of production of gold and silver, 
363-367 ; causes of disparity 
between silver and gold, 368; 
of crises, 1825-6 in England, 
371; 1847 in England, 374; 1857 
in England, 377; of 1816-19 in 
United States, 381; of 1837 in 
United States, 382-385; of 1857 in 
United States. 385-388; of 1866 in 
England, 389; of 1873 in United 
States, 390-392 ; of balance of 
trade doctrine, 393, 394; of bal- 
ance of trade, how marred, 395; 
of cost of armies, 437 ; of crime, 
440 ; of income and expendi- 
ture of United States in 1883, 45; 
of average imports and ratio of 
revenue to imports under pro- 
tection and low duties from 1821 
to 1861, 469-i70 ; of taxation in 
Great Britain, 476, 479 ; of pau- 
pers in England, 478 ; of cost of 
collecting revenue, 482 ; of spo- 
liation of India, 484-488 ; of 
Turkey, 488-491 ; spoliation and 
decline of Ireland, 491-495 ; of 



occupations of French, 496 ; of 
women in France, 497 ; of reve- 
nues, 498 ; of French taxes, 
499 ; of population of the Zoll- 
verein, 516 ; of German reve- 
nues and prosperity, 492-524 ; 
of sources of revenue, 523 ; of 
iron and steel production, 522 ; 
of emancipation in Russia, 527 ; 
of resumption of specie pay- 
ments in Russia, 528 ; concern- 
ing China always begin in a 
guess, 537 ; of Chinese popula- 
tion as estimated by most com- 
petent geographers, 538-550 ; of 
Chinese immigration to America, 
548 ; of rates of duty and of 
duties paid by foreign producers 
under American tariff, 607-620 ; 
of steel rails, cutlery, plumbing 
ware, paper,and crockery trades, 
620-626 ; of experiments in silk 
culture in America, 631 ; Ameri- 
can manufacture of silk, 633 ; 
of silk manufacture in England, 
634-637 ; of progress of iron in- 
dustry in Great Britain, 646 ; of 
the world's iron, steel, and coal 
production in 1881-1883, 650 ; 
of American iron and steel pro- 
ducts, steel rails, railroad build- 
ing, and immigration fi-om 1860 
to 1883, 651 ; of English and 
American shipping and their 
rivalry in ocean carrying trade, 
652-664 ; of manufactures in 
Canada, 664, 668 ; of sheep and 
wool and prices, 666-684 ; of 
cotton and cotton goods manufac- 
ture in United States and Eng- 
land, 684-691 ; of quinine, 692 ; 
of American and foreign salt, 
693-697 

Statutes, of England protective and 
prohibitory, 555 ; protective of 
iron, steel, and shipping, 648 ; 
American less so, 648 ; English 
protection of wool, 669 

Steel (see Iron), acts to protect 
manufacture of , in England, 555; 
wages earned in iron and steel 
in United States, 312; German, 
523; wages in steel woi'ks Uniteil 
Slates and Europe, 581 ; were fbe 
duties on steel rails a tax on con- 



V72 



GENERAL INDEX. 



sumers or a relief to railways? 
589, 651 ; English and American 
prices of iron and steel wares in 
1882, 590; antiquity of, 645; 
world's product of steel in 1883, 
650 

Steel i-ails, effect of American pro- 
duction on prices, 590 ; other 
causes than tariff operated to 
delay fall in prices, 618, 619; 
production and prices in United 
States from 1860 to 1883, 651 

Stock, exchanges, a more perfect 
form of market, 101 ; shrinkage 
of railway stocks, 332; live stock, 
absence of in Chinese empire 
and its economic effects, 540-547 

Stone, wages of working in, in Eng- 
land and Massachusetts, 583 ; 
age of stone, 645 

Stoneware, exports of, 610 ; im- 
ports of and revenue from, 613 

Strikes, relation of to commercial 
crises, 190 ; waste of, 310, 338 ; 
not wholly cured by profit shar- 
ing, 314 ; number of, from 1881 
to 1886, men and establishments 
engaged, and gain and loss by, 
338 ; English strikes and riots of 
the machine breakers, 684 

Subsidy, protection by, efficiently 
applied to English vessels, 656- 
660 ; while denied to American, 
656-659 ; liberality of British 
government, 663 ; mode of pay- 
ing, 663 ; economy of subsidies, 
663, 675 

Suez canal, favors absenteeism in 
India, 487 

Suffrage, influence of extended, 
403 ; expanding the right of, 
418; effect of extension of, on the 
spirit and intent of legislation, 
434 ; why only males vote, 435 ; 
effect of universal, on modes of 
taxation, 474 

Sugar, revenue from (1861) in Eng- 
land, 480 ; repeal of import duty, 
480 ; excise, 481 ; revenue from, 
in Erance, 498, 503 ; History 
of development of beet sugar 
in Europe, 503-506; efforts to 
prove a country richer for not 
producing it, though it can pro- 
duce it cheaper than any others 



but not at first, 504 ; France ob- 
tained abundant and cheap beet 
sugar in 1840, 505 ; German ex- 
port of, 530 ; cultivation of, 
partly extinguished hj forced 
importations in Japan, 554 ; 
wages in refineries in United 
States and Europe, 581 ; cane 
growers in Jamaica seek to get 
into a protected market, 505 ; 
since 1860 France taxes beet 
sugar heavier than colonial, 505; 
export of, 611 ; import and reve- 
nue, 614 ; state of American 
market and prices relatively to 
European, 618 ; necessity of 
making all the sugar a nation 
consumes, 639 

Supply and demand, economics a 
study of, 4 ; law of applied to 
prices as affected by duty, 591- 
594 ; law of ratio of whole sup- 
ply to whole demand applied to 
determine effect of import duties 
on prices where there . is a com- 
peting domestic production, 618; 
when supply is short prices rise 
in disproportion to scarcity, 690 ; 
of cotton in cotton famine, 690 ; 
prices diminish chiefly with the 
magnitude of supply (shoes), 
697, 698 

Surplus, of revenue in United 
States under protection, 384 ; 
division of, among the States, 
384 ; how it arises (1883), 468 ; 
existence of, not a good reason 
for withdrawing protection from 
salt (Jefferson), 640 ; the greater 
the national surpli;s relatively to 
a uniform demand the less its 
aggregate value (woolens), 673 ; 
compare Tooke, Carey and 
Baird, 113, 117 ; (illustrated in 
case of raw cotton), 687 

Sweden, monetary unit of, 338 ; 
wages of blacksmiths and iron 
pucldlers in, 511 ; American bal- 
ance of trade against, 600 ; pro^ 
duct of iron, steel, and coal in, 
650 

Switzerland, monetary unit, of, 
338 ; economic conditions favor 
democracy, 403 ; wages in, in 
1867, 511 



GENERAL INDEX. 



V73 



T. 

Table-ware, American export of, 
596 

Tallow, United States revenue on, 
not paid by consumer, 586 ; ex- 
port of, 611 ; import and reve- 
nue, 614 

Tanning bark, protection on, and 
export of, 610 

Tapestry, introduced in France, 
639 

Tar, 520 

Tariff, when it becomes necessary 
as a protective agent, 319 ; of 
1824-28 in United States, 383 ; 
compromise tariff of 1833, 384 ; 
how it brought on the inflation 
of 1834-36 and crisis of 1837, 
385 ; tariffs in United States 
from 1820 to 1881 compared as 
to productiveness of revenue, 
imports, and immigration, 468- 
472 ; importance of making, 
488 ; Turkish tariff on English 
steel 3 per cent., English tariff 
on Turkish steel $150 per ton ; 
how English and Irish tariffs 
contrast under Act of Union, 493; 
England takes protection and 
dear goods and gives Ireland 
free trade and cheap goods, 493 ; 
sample of specific duties in Zoll- 
verein, 517 ; tariff of Russia de- 
signed for protection chiefly, 527 ; 
essential uniformity in all tariffs, 
530 ; except where sovereignties 
are coerced, 533, 534 ; Chinese 
and Japanese tariffs, obtained by 
American and English coercion, 
534, 553 ; tariff of France, pro- 
tective duties in, 498 ; discussed 
by Smith, 500; retaliatory tariffs, 
500 ; tariff for revenue onlj^ an 
impossible thing in the United 
States, 561-563; Sidgwick on, 
561-566 ; need of protection in- 
creases with means of transpor- 
tation, 569 ; rate of tariff" re- 
quired to sustain production in 
lines where equivalent effort pro- 
duces, 585 ; tariff' not a tax when 
the production it causes lowers 
prices more than the duty raised 



them (steel rails), 589, 651 ; 
tariff' not a tax on consumers 
when paid by importing produ- 
cers, 612-615 ; when price is 
raised but there is a competing 
domestic production, 618-620 ; 
change of revenue tariff on silks 
to protective, 633 ; effects of, 
633 ; tariff as to silk from 1790 
to date, 634 ; Jefferson regarded 
tariff and patriotism as identical 
even where the revenue was in ex- 
cess of needs, 640 ; of 1824 on 
glass, and eft'ect of, 643 ; British 
tariff on iron and steel from 1790 
to 1849 created the British mer- 
cantile marine of 1850 tol888, 648 
-650 ; American free trade tariffs 
on iron and steel for same period 
destroyed our ocean carrying 
trade, 648-650 ; discriminating 
daties according to bottoms in 
aid of ships, 653 ; effect of pro- 
tective tariff in other countries 
on England, 664 ; principles on 
which wool and woolen duties 
were based in United States, 
677 ; caused a great increase in 
production of woolens and wools 
and a gradual lowering in price 
through abundant supply, 674, 
678; Bigelow and Hayes on, 678; 
on quinine, 691, 692 

Tartary, economic conditions fa- 
vor nomadic life, 403 

Tasmania, 445 

Tax-payers, relieved to the extent 
of revenue collected from for- 
eigners, 585 ; amount of relief, 
586, 613, 616, 617 

Taxation, the state the proper 
judge of the purposes to which 
it is adequate, 431 ; earliest tax- 
ation was tribute, 453 ; rapine 
by, 453 ; is rent where govern- 
ment runs industry, 453 ; taxes 
in services, 453 ; and representa- 
tion, 453 ; objects of, 455 ; theo- 
ries of equalitj" in, 456 ; on pro- 
perty, 456 ; on expenditure, 456; 
on superfliiilios, 456 ; despotism 
of single-taxism, 457 ; vagueness 
and self-contradiclion in Dr. 
Smith's theories of, 457-460 ; 
elusiveness of taxes and dif- 



^74 



OENERAL INDSX. 



fusion of their effects, 462-468 ; 
self-imposed taxation, 466 ; tax- 
ation by profits of trade with 
conquered barbarians, 483, 490 ; 
in France, 496-504 ; in Germany 
and Prussia, 522 ; tax on human 
energy in creating tlie means of 
reproducing wealth in western 
nations, 549 ; degree in which 
burden of domestic taxation is 
borne by domestic producers, 
556 ; taxation for revenue (with- 
out either protecting or destroy- 
ing industiy) an impossible chi- 
mera, 561, 562, 563 ; all produc- 
tion caused by some form of tax- 
ation, 584 ; Ferry's error, 584 ; 
tariff duties in part relieve dom- 
estic tax-payers wholly from 
taxation, 585 ; by collecting rev- 
enues from foreign producers, 
586 ; duty on import does not ef- 
fect a tax on consumer unless it 
raises price, 589, 612-614 ; nor if 
deductions in price exceed rise, 
590 ; the " tax " of protection an 
exploded myth, 683 
Taxes, effect of, on statistics, 29 ; 
as a means of confiscating land 
by numbers, 125-130; none on 
land in Great Britain, 144 ; in 
America, 144 ; socialistic, 145 ; 
transportation as a tax on pro- 
duction, 250-253 ; the chief tax 
on producers of farm products, 
320; Elder on greater freedom 
in taxation as society advances, 
324; of United States in 1861-5, 
353; paid freely where money is 
made plenty, 353; modes of vot- 
ing in early England, 408, 409; 
tribute the earliest form of, 452; 
mention of, on Egyptian monu- 
ments, 453 ; in Roman Empire, 
Asia, Carthage, Gaul, 454; mode 
of distributing under Constan- 
tine, 455 ; in Eastern Empire 
and China, 455 ; enormous rate 
of, on salt in India, 455 ; the 
seed tax is the source of all pro- 
duction, 466 ; what taxes are 
most lightly felt, 467, 468 ; state 
and local taxes in, 468; on liquors 
and tobacco an imperceptible 
check on consumption, 475 ; 



amount of local and national 
taxes in Great Britain, 476 ; 
taxes in profits of foreign trade, 
484; ratio of taxes to income in 
India, 486 ; taxes become a 
ground rent, 486; foreigners and 
resident aliens exempt from 
in Turkey, 488; on beet sugar in 
France, 505 ; in Germany, 522, 
523 ; on liquors brings govern- 
ment into partnership with the 
traffic in Russia, 527 ; distribu- 
tion of, in Russia, 529 ; exemp- 
tion of Russia from certain 
heavy forms of taxation, 529 ; 
effect of proposal tax according 
to population, or to give alms, 
on census, 539 ; taxes in Japan, 
554; the tax effected by a pro- 
tective duty (if it effects one) 
repeals itself, 564 ; taxes may be 
thrown on foreign producers, 
(Sidgwick), 566; tai'iff not a tax 
when the production it causes 
reduces prices by five times the 
entire duty (steel rails), 589 ; all 
internal taxes reduce the protec- 
tive effect of tariff, 694 

Tea, on free list in United States, 
573, 600 ; early discriminating 
duties on, to favor American 
ships, 653 

Terms, elusiveness of economic 
terms, 14 

Texas, area compared with Ger- 
many, 315; salt beds and tem- 
porary protection under a free 
trade confederacy in salt mak- 
ing, 694 

Textile fabrics, aggregate returns 
to labor and capital in, 312 ; are 
refused protection in India while 
protected in England, 487 ; 
Liverpool Cotton Circular on 
American tariff, 664 ; causes of 
prices, 691 

Thistle crowns, 340 

" Throstle," invention of. 681-685 

Tillage, perfection of in Germanj", 
520 ; more women than men 
employed in, in Wurtemburg, 
525 

Timber, exports of, 611 ; imports 
and revenue, 614 

Time required by free trade to pro- 



GENEUAL INDEX. 



duce tiuancial crises — four j^ears 
in United Stales, 383 ; one your 
in England, 374, 376 ; seven 
yeai's in United States when de- 
layed by unprecedented intlux 
of gold, 385 ; four to eight years 
in 1816 to 1824 to extend to all 
branches, 643 ; thirty-six years 
of free carrying trade sustained 
by United States before the free 
trade j^rinciple proved fatal, 
656 

Time required by protection to 
produce cheapness — beet sugar 
in France, twenty years, 515-521; 
cutlery in United Stales, eight 
years, 596 ; general manufac- 
tures in Germany, twenty -five 
years,514-517;to build up Amer- 
ican manufactures to prosper- 
ity, fifteen years, 641 ; British 
woolens, twenty-five years, 669 ; 
export of wool prohibited 165 
years, 670; to convert wool into 
a coat, one day, 671 ; under reduc- 
tion of duty (3 cents per pound 
of wool) to reduce whole num- 
ber of American sheep one- 
seventh, two years, 679 ; to re- 
duce American quinine manu- 
facture one-half, five years, 672 

Tin wares, export of, 611 ; import 
and revenue from, 614 

Tithes, Hebrew, 453 ; India, 453 ; 
paid by natives in Turkey, aliens 
pay nothing, 488 

Title, private, as related to labor 
and production, 125, 130, 134; 
regulation of, by government, 
430 

Tobacco, duty on, in England, 
liow prevented from protecting 
the cuUivation of, 461, 462; 
Shadwell and McCulloch on, 
480-481 ; revenue from, 480 ; 
comes from United States, 480 ; 
invoice price in United States of 
tol)acco shipped to England, 481 ; 
revenue from monopoly of, in 
France, 498 ; statutes to protect 
manufacture of, in England, 
555 ; English duty on American 
tobacco according to Adam 
Smith justifies American duty 
on any English product, 556 ; 



export of, 611 ; imports and 
revenue from, 614 

Tolls, 454, 476 

Tonnage acts, for American ves- 
sels, 653 ; repealed by treaties, 
654 ; dues, different on English 
and American vessels in Ameri- 
can ports, 655 ; tonnage in for- 
eign and American vessels, 656 

Tons, gross and net, 650 

Tooke, on prices, 113-117 

Trade, its relation to commerce, 6; 
essay on balance of, by G. King, 
95 ; boards of, for grain and 
provisions, economy of, 102-120; 
engagc'il in, in United States, 320; 
Great Britain derives no revenue 
but profits of trade from out- 
lying dominions, 484 ; domestic 
trade increased lay protection in 
a degree greater than foreign 
trade is checked, 512; trade arises 
not from production of unequal 
values of the same product, but 
of like values of unlike products, 
513 , hence England's superi- 
ority in the same line paralyzes, 
513 ; freedom of internal trade 
as essential as protection from 
exterior competition, to the 
American policy, 514 ; a large 
trade makes a low price, 623 ; 
internal trade between North 
and South the most permanent 
and cordial basis of political 
imion, 649, 650 ; three-cornered 
commerce, 664; in slaves between 
the slave-growing and cotton- 
growing States in 1815-1830, 
677-679 

Traders, home traders protected 
when, without raising prices, 
foreign competing article is ex- 
cluded, 609 

Trades unions, 166, 309-315 ; pro- 
portion of strikes ordered by, 328 

Transit duties, 455 

Transporters, protected when, 609 

Transportation, and rent, 249 ; 
Mill's theory of annihilation of 
rent by perfect transportation, 
247-253 ; as a tax on farmers, 
820 ; strikes in, 328 ; relation of 
State to, 455; taxes on, in China, 
455 ; number of persons in, in 



776 



GENERAL INDEX. 



France, 496; greater the develop- 
ment of transportation the 
greater the need of protective 
tariffs, 569; reduction in cost of, 
a mode of protection, 675 

Traps, American export of rat, 
beaver, and fox, 596 

Travel, 520 

Treason, industrial, a general 
strike would be (Jevons), 303 

Treaty, tariffs by, of England with 
Turkey, 488 ; Portugal, 500, 670; 
Ireland, 494 ; of 1816 between 
Great Britain and United States, 
514 ; of England with Japan, 
China, etc., 516, 533; held irre- 
vocable by England, 554 ; with 
United States, "643 ; concerning 
shipping, 642 ; extended to other 
countries, 653 ; of 1815, 655 ; 
Huskisson on the profits of the 
reciprocity swap, 655 ; of Eng- 
land with France in 1786 in 
woolens, 674 

Tribe, and tribal ownership by, 
effects of, 23, 49-54, 130 

Tribute, of India, 486 

Tnpoli, 338 

Troy, ancient, Schliemann on iron 
in, 645 

Trunks, export of, 611 

Tunis, French bondholders in, 450 

Turkey (Ottoman Empire), reve- 
nue policy of, 320 ; ornaments 
worn in, 331 ; monetary unit of, 
338 ; gave England free trade, 
170 years in advance of Eng- 
land's repeal of the corn laws, 

488 ; protective England sapping 
the wealth of free-trade Turkey, 
from 1675 to 1842, 488-491 ; for- 
mer wealth of, in manufactures, 

489 ; present desolation, 490, 516; 
the only thoroughly free trade 
country in Europe, 490 ; Eng- 
land's trade in cotton goods with 
Turkey, 689 

Tyre, 450; Tyrian dyes, 669 

U. 

Umbrellas, exports of, 611 
Union, economic effects of Act of 
Union in Ireland, 492, 493 ; how 
it was bought and paid for, 493; 



free trade to Ireland and pro- 
tection to England were the 
basis of the Act of Union, 493, 
493, 494; union of the states 
hinges upon maintaining pro- 
tective pohcy, 638-630; the pro- 
slavery struggle, of 1830 to 1865, 
687, 688 
Unite, coin of James I. 340 
United States of America, drink 
bill of, 25 ; travel in, 28 ; free 
and slave States in, 33 ; homi- 
cides in; 34 ; secondary impor- 
tance of foreign trade in continen 
tal as compared with insular 
states, 35 ; [field for study of 
economics the best, 36 ; income 
of, 36 ; export of shoes from 
New England, 35 ; the best 
economic teacher, 38 ; value of 
its census, 39; growth of pop- 
ulation, 140 ; area of, 141 ; sys- 
tem of land registration, 143 ; 
population, 145, 146 ; future 
population, 145 ; displacement 
of labor in by machinery, 209 ; 
annual product of industry in, 
224 ; wages in colonial period 
low, 237 ; value of agricultural 
product, 334 ; its standard of 
wages, 315 ; its debt-paying poli- 
cy ,353-355 ; crises in, 381-385 ; 
coinage in from 1851 to 1856, 
386 ; responsible government 
not developed as a system 
for discussion or adoption when 
constitution of United States was 
modeled, 407, 409 ; government 
of United States defined, 415 ; 
as respects foreign nations each 
State forms a municipal subdivi- 
sion of one nationality, 415 ; 
cost of maintaining its govern- 
ment in 1861-1865, 437-439; 
various forms of debt in United 
States and amount, 448 ; state 
systems of taxation in, 456- 
468 ; national, 468 ; relative rev- 
enues in protective and free-, 
trade periods, 469-471 ; how af- 
fected by English duty on tobac- 
co,480; number of custom officials 
and cost of collecting duties, 
483 ; wages of iron puddlers and 
blacksmiths in, and in Europe, 



GENERAL INDEX. 



■11 



511 ; origin of federal union in 
United Sttites and Germanj^ 
514 ; effects of wars of IHOG to 
1815 and peace of 1816, 514 ; 
United States leads in certain 
ways, 521 ; resumption of specie 
payments in United States com- 
pared to that in Russia, 529 ; 
subordinate position of United 
States in trade with China, 586 ; 
silver interesls of, 586 ; has no 
constitutional power to pass a 
tariff for revenue only, 562 ; 
unity of the country involves 
loyalty by the government to 
those who have paid the cost 
of maintaining it, 575 ; relative 
w^ages in United States and Eu- 
rope, 581 ; railway freight, 584 ; 
no longer supplied by Birming- 
ham, 596 ; motive in establishing 
American 'Union was chiefly 
protection, 628-630 ; first cul- 
ture of silk in, 631 ; Jefferson 
believed protection should be 
continued, nothW'ithstauding it 
made a surplus, 640 ; C[uantities 
and values of glass manufacture, 
643, 644 ; population compared 
with Great Britain, 646 ; less 
vigorous than England in pro- 
tecting iron and steel manufact- 
ure from 1790 to 1845, 647, 648; 
disastrous effects of American 
free-trade negligence on ship 
building, 648-650 ; product 
(1883) of iron, steel, and coal, 650; 
percentage of world's production, 
650 ; United States built up a 
carrying trade and merchant ma- 
rine by protection, 652-656 ; 
and lost it bj^ bowing the knee 
to the free-trade Baal under 
name of " reciprocity," 655 ; in- 
fluence tariffs of British com- 
merce from identity of interests 
merely, 664 ; production and im- 
portation of wool, 672, 674 ; 
diagram of, 679 ; the struggle 
over slavery, 687, 688; Eng- 
land's trade in cotton good, with, 
689 ; imports and exports of cot- 
ton goods by, 696 
United States of Colombia (see 
Colombia) 



Unity of law, between econo- 
onncs and physics, 4 ; of states, 
416 ; and of essential form and 
operation underlying the state 
mechanism, however differently 
selected, 416 ; of Germany, 514- 
524 ; in a nation resembles that 
iji a family, 575 

Universities, 480 

Uruguay, America buys from, 
England sells to, 600 

Utilit}^ relation of to value, 6, 96- 
100 ; Jevons on fluctuations in, 
according to change in wants, 95 ; 
how affected by supply, 99; of ac- 
cumulations, 220; increase of util- 
ities with progress of man, 232 ; 
utility of private ownership as 
against state ownership, 304 ; of 
the c|ualities which promote suc- 
cess and profit in employing la- 
bor, 308; is labor paid for in 
proj^ortion to the degree in which 
its utility is social? 323; increas- 
ing utility of the state as society 
advances, 324 ; of ornaments 
among barbarians, 331 ; of mon- 
ey, 344 

V. 

Valises, exports, 611 

Values, Mill's theory of interna- 
tional values, 10-14; relation of 
to utility, 6; when depend on 
cost of production according to 
Mill, 10; vanishing values, 69- 
71; definition of, 79; by Adam 
Smith, Carey, 79; by Roscher, 
Marx, Bastiat, Cairnes, F. A. 
Walker, Cherbuliez, Jevons, 
Perry, La Vasseur, Locke, Mc- 
Culloch, Ricardo, Carey, Mac- 
Leod, Aristotle, Condillac, 
Whately, Say, Beccaria, 79-84; 
fallacy of resting value on labor, 
84; how all labor passes into 
commodities, 85 ; comes from 
the consumer, 86; Karl JMarx's 
theory of, 88-91; begins with 
Smith and Ricardo's error, and 
carries it out logically to thug- 
gism, 91; Jevons's theorj' of. 94; 
based on Gossen's theory of pleas- 
ure and pain. 94; values are de- 
termined in markets, 99; causes 



778 



GENERAL INDEX. 



of values of land, 125, 130, 145; 
distribution of values is the 
counter to distribution of com- 
modities, 196; law of declining 
and advancing values, 204 ; 
shrinking of, 212; elusiveness of 
the supposed " hard pan " to be 
reached by shrinkage of, 212; 
sense of, determines success in 
business, 218; values which de- 
cline as society grows, 221; little 
waste in higher values, 224-226; 
of laud is the capitalization of 
economic rent, 237; as affected 
by transportation, 241-253; of 
farm lands, products, and labor, 
253-261 (Dodge); sense of value 
must be keen in the successful 
director of labor, 307; the sui'- 
plus in one industry constitutes 
by exchange the values in an- 
other, 320; values given to raw 
materials by exporting only fin- 
ished products, 322; relation of 
to money, 335; of commodities 
more variable usually than that 
of money, 336; of the standard 
monetary unit of most countries 
in United States currency, 338; 
overvalued metals seek coinage, 
341; undervalued metals cannot 
circulate, but are melted, 342; 
fall in producing panic, 389; of 
criminal, 444 ; his capacity to 
produce has the same economic 
value to society, 440; aggregate 
value of land in India hardly 
greater than in New Jersey, 488; 
of wines in France, 497; of aver- 
age imports and exports increase 
as their weight lessens, 518-521 ; 
of an extra dollar on Saturday 
night to the workman, 584; of 
British manufactures, 637; as 
quantities of woolens exported 
increase value declines, 673 (com- 
pare Tooke, Carey and Baird, 
113 to 117); of English cotton 
goods exported and consumed, 
685 

Varnish, manufacture of taxed 
in China, 455; exjwrt of 
611; import and revenue, 
614 

Vegetarian diet, relation to eco- 



nomic condition and political in- 
stitutions, 402 

Velvets, 672 

Venezuela, monetary unit of, 338; 
balance of American trade with, 
600 

Venice, in glass making, 639; in 
woolens, 669 

Vermont, why may not import 
free from Canada, 574-576; peo- 
ple whose products are the same 
can not trade, 574; Canada can 
not reap our prices because she 
did not help to sow their cost, 
579; wools of, 672 

Versatility of aims, when an obsta- 
cle to economy, 303 

Vessels and steamers, export of, 
611; American vessels reduced 
to a free competition with for- 
eign "in carrying ocean freights 
to and from American ports in 
1816, 642; effect of laggard pro- 
tection to iron and steel manu- 
facture from 1790 to 1845 com- 
pared with English protection, to 
cripple American shipbuilding 
from 1855 to date, 648-649; ocean 
carrying trade of England built 
up, 656; by subsidies, 659, 662; 
treaties,- 642, 655 ; piracy, 663 ; 
and righteousness, 608 

Veto, its disuse in England, 408- 
410; power of in United States, 
417; in India, 533 

Vice, taxes on, to promote utilities, 
463 

Victoria, tariff of, 530; compared 
with New South Wales, 530 ; 
protects glass, upholstery, furni- 
ture, etc., 530 

Vienna, 405 

Vinegar, revenue on in United 
States paid by foreign producer, 
586; exports, imports, and rev- 
enue, 611, 614 

Virginia, early precedence, 149 ; 
slavery in, 384; culture of silk 
in, 631; glassmaking in colonial, 
639; colony of, protected sheep, 
wool and wool manufacture, 676; 
salt product of, 693 

Visionary, invention of power loom, 
685 

Voting, modes of in Roman Re- 



GENERAL INDEX. 



779 



public, 4l2; in United States, 
417-429; plural voting on taxes 
in England, 479; property qual- 
ifications, 479 
Vulcan and iron and steel, 645 

W. 

Wages, rate af, Carey on, 16 ; 
Brassey on, 35 ; not propor- 
tionate to ratio of capital to 
population (McCullocli), 168 ; 
wages a payment for service, 
85; how emploj'ment for arises, 
164; the first are presents, 165; 
may be high where capital is 
scarce, 170 ; are the effect of 
profits, 170 ; though appearing 
to he the leavings, 170; based on 
eciuivalence of exchange between 
employer and employed, 171- 
172 ; equality of division, 172- 
182; received by wages class in 
Great Britain, 176 ; in manu- 
factures fixed in part by those 
in agriculture, 181 ; are paid for 
obedience only and not for mus- 
cular force or creative power, 
183-184; Karl Marx's theory of, 
rests on a false basis, 184; losses 
of wages workers in strikes, 190; 
how wage workers may obtain 
the "profits" also, 213; when 
capital is risked workers earn 
profits, 222 ; promoted by large 
capitals, 227 ; low rate of in 
India, 227 ; law of increasing 
share of product to wages, how 
offset in new industries, 234 ; 
Bastiat on the preference of 
wages to profits or title by work- 
ing men, 234; wages are capital 
in smaller cjuantity, 235; are cost 
of labor expended in production, 
238; rates of on farms, 253- 
261; a payment for labor time, 
288; differs from fee, 289; com- 
mission, 290 ; royalty or share, 
290 ; cause of and of rate, is in 
profits, 293-316 ; population not 
a check on wages, 295 ; wages 
lower in countries of slow pro- 
duction, 297-298 ; and without 
machinery, 298; lower in country 
than city, 298 ; rates of, fixed 



by labor-saving machines, 299 ; 
causes which compel men to 
work for wages, 807 ; wages 
class excel in fervor and gener- 
osity, but fail in calculation and 
prudence, 309 ; trades unions, 
310 ; in what industries wage- 
workers get the highest ratio of 
product, 313 ; effect of higher 
wages than the competitive rate 
to check extensions of works, 
313, 314 ; are wages increased 
by profit-sharing ? 314 ; relative 
in different countries, 315; why 
higher in Great Britain than in 
Germany, France, and Russia, 
317 ; not increased by lessening 
population, 320, 321; of labor in 
proportion to its social use, 323; 
of women, 325-328; economj^ of 
working for, 433; small number 
of wage workers in France and 
large number of small em- 
ployers, 496; rates of wages for 
blacksmiths and iron-puddlers 
in 1867 in United States, Great 
Britain, Prussia, Saxony, and 
Switzerland, 511; lower in Ger- 
many than Great Britain, causes 
of, 516; increase of in Germany 
with increase of protection, 523- 
524 ; English acts to regulate 
wages, 555; higher wages (Sidg- 
wick) by protection, 566; wages 
affected by excessive supply of 
workmen, 574 ; Perry's error 
(with Ricardo) in supposing 
wages must be lower because 
capital is higher in America than 
in Great Britain, 579-582 ; com- 
parison of rates of in Massachu- 
setts and England, 580-582; Wen 
dell Phillips on the moral advan- 
tages of good wages, 583; why 
rates of, needed tariff' protection 
where equivalent efforts here 
and abroad would produce same 
commodities, 585; wages pi'o- 
moted by protection, 623-627 ; 
wages paid in Canadian manu- 
factures, 667-668; wages depend 
on the value of commodities and 
not on their quantity, 673 
Wages fund tlieorv, Sidgwick, 
Mill, and Thornton on, 15; Carej 



780 



GENERAL INDEX. 



on rate of wages, 16 ; wages, 
rent, and interest as shares de- 
pend on who distributes, 163 ; 
defined by Cairnes, Mill, Bras- 
sey, Thornton, 290-292; the 
aggregate wage fund tends 
toward equal sharing with ag- 
gregate returns of capital, 311- 
314 ; reason why wages are eight 
times greater in United States 
than in China lies in animal and 
machine power, 542; why wages 
are low in China and India, 625 

"Want and wealth, the complaints 
of each other, 401 ; object of 
American labor organizations is 
not to prevent want, but to con- 
trol industry, 310, 328, 390, 597; 
man's first want, 645 

War, effect of on prices, 113 ; of 
allied powers with Napoleon, 
112; effect of on means of pay- 
ment, 114, 221; on industry, 211; 
on prices, 221 ; war debts, 353 ; 
paying expenses of as incurred, 
353 ; Adams and Laughlin on, 
353 ; exhaustion of war post- 
poned, 354; effect of as to crises, 
380; absence of gold at outbreak 
of war of 1861, 221; close of war 
in United States produces mone- 
tary crises in England, 389 ; 
business revived by, 385 ; as a 
productive agency, 439 ; crime in 
social war, 440 ; expense of war 
debt in United States, 468 ; rise 
of revenue during war with 
" Confederacy," 470 ; effects of 
war tariff, 469-472 ; Russia's 
escape from in part, 529 ; to 
force opium on China, 534 ; 
liabilities to war increased by 
importing what we can produce 
(Jefferson), 598; growth of manu- 
factures in United States during 
war of 1806-1815, 641 ; making 
implements of war the first 
manufacture, 644 ; how the 
United States would have 
avoided the war for secession, 
650 ; economic effects of war on 
northern and southern states, 688 

"Washington, capture of, 437 

Washing machines, American ex- 
port of, 596 



Waste of forests, 148; of animals, 
149; by misdirection of industry, 
mainly incurred by the enter- 
prisers, 191 ; small, of society, 
224 ; servants, 226 ; small in the 
higher values, great in the lower, 
226 ; waste involved in strikes, 
310, 314, 328 ; of being without 
an army in United States, 437 ; 
of life in social struggles and 
fanaticism, 446, 447 ; relative 
waste of labor in China and in 
western nations as each is seen by 
the other, 545, 550 ; in tillage in 
China, 551 

Watches, American machine-made, 
superiority of abroad, 596 ; ex- 
ports, duties, 611; imports, 
revenue, 614 

Ways, 480, 432 

Wax, export of and duties on, 
611; imports and revenue, 614 

Wealth, conflicts of definition, 5 
is money wealth in the sense 
held by mercantile school, 18 
defined, 41 ; its economic mean 
ing distinguished from its social 

41 ; relation of, to civilization 

42 ; as defined by Smith, Carey 
Bastiat, Roscher, Fawcett, Mill 
Jevons, Sidgwick, Smith again 
Roscher, and " Wealth," 41-43 
Carey's definition reviewed, 43- 
47 ; relation of, to want, 45 
need not have exchange value, 
46 ; relation to subordination 
and coercion, 47 ; savage life is 
absence of, 47 ; Fawcett, Smith 
and Carey agree on this, 48 ; 
ownership of property in com- 
mon retards growth of, 49-54 ; 

• social, 60-65 ; of nations, 65-69 ; 
of India, 66 ; Evanescence of, 
69 ; destruction of, in maintain- 
ing government, 70 ; disap- 
pearance of values of land, 71 ; 
reproductive and enjoyable, 72 ; 
social endures longest, 72 ; vital 
most essential, 72 ; relation of 
owner to social wealth is custody 
only, 93 ; consumers' and pro- 
ducers', 94 ; Jevons, Gossen and 
Sidgwick on forms of, 94 ; also 
Senior and Banfield, 94 ; distri- 
bution of, and of products, 196 ; 



OENEllAL INDEX. 



781 



consists in inequality of means, 
201 ; it paralyzes its own power 
when equalized, 201 ; equal dif- 
fusion of enjoyable, depends on 
unequal accumulation of repro- 
ductive, 204 ; redistribution of, 
by investment, ostentation, lux- 
ury and waste, 212-214 ; shrink- 
age in value of reproductive, pro- 
duces less suffering if held by 
large owners, 222 ; consumption 
of, by rich and poor, 225-226 ; 
loss of, may produce crisis, 378 ; 
and want are the steam and 
vacuum in the social engine, 
401 ; makes a people aesthetic, 
poverty, quarrelsome, 402 ; gov- 
ernment by the rich, 405 ; vot- 
ing according to, in Rome, 412 ; 
increasing power of, in America, 
414 ; the chief foe to crime, 442 ; 
but inequalities of fortune 
(Quetelet) tend to crime, 442 

Weapons, early manufacture of, 
645 

"Wearing apparel, export of , 611 

Weaving, inventions in, 681, 684- 
685 

Weighing machines, superiority of 
American abroad, 596, 611, 614 

Weight of products lessens as their 
values increase, 518-521 

West Indies, culture of silk in, 631 ; 
England's trade with, 6S9 ; pur- 
chases from, bear no proportion 
to sales to, 600 

Wheat, prices and scarcity in En- 
gland, 116 ; effect of free trade 
in, 118-119 ; rate of growth of, 
under seed selection and Ihin 
planting, 231 ; cost of produc- 
tion in Iowa and England as af- 
fected by rent and trans] )orta- 
tion, 243-257 ; average cro[) per 
acre in England, 254 ; prices in 
war of 1812-15, 380 ; German 
imports and exports of, 519 ; 
protective duties on in Victoria, 
530 ; prices not reduced in En- 
gland b_y repeal of protective 
duties, 558 ; quantity of wheat 
crop, 559 ; decline of CTiltivation 
in England, 559 ; in Scotland 
and Ireland one half, 559 

Wheeling, Va., glass, 643 



Window glass, when and where 
tirst made, 639 

Wines, taxes on, 475 ; English 
revenue from, 480 ; manufac- 
ture of, in France, 497 ; duties 
on in England, 500 ; in France, 
503 ; Germany, 520 ; export of 
American, 611 ; import and rev- 
enue, 614 

Wisconsin, woolen manufacture 
in, 666 

Women, wages of, 325-328; voting, 
435-437 ; crime, 442 ; of seden- 
tery, 443 ; large number of 
work in France, 497 ; in Ger- 
many, 524, 525 ; large proportion 
withdrawn from labor in United 
States, 525 ; relative wages of, 
to men in Massachusetts and En- 
gland, 582 ;. in strikes, 328 ; 
causes of large American de- 
mand for silks, 633 ; shoes of 
women exported, 697-698 

Wood, 519 ; wages of work in in 
Great Britain and Massachusetts, 
580 ; wood, lumber and timber, 
export of and duties on import, 
611 ; import and revenue from, 
614 

Wool, trade between Belgium and 
France, 27 ; Great Britain and 
France, 27 ; conditions of weav- 
ing at a profit, 319 ; tariff of 
1824-28 as to, 383 ; change in 
German wool and woolen trade 
under protection, 515 ; trade of 
wool for cloth between Germany 
and England, 518-520 ; revenue 
on imports of, into United 
States, not paid by consumers, 
586 ; this point more fully 
shown, 679-682 ; see also chart 
of prices, ih. ; antiquity of wool- 
growing, 668 ; a finished pro- 
duct in wiiat sense, 671 ; quali- 
ties of wool, 672 ; and wool- 
ens, 672 ; quantities required 
for consumption relatively to 
population, 672-673; protec- 
tive duties on, since 1824, 
676; "free wool" would mean 
great cry and little wool, 676 ; 
export of, from A\istralia, 676 ; 
increased yield of, in United 
States, since 1850, 677 ; duties 



782 



GENERAL INDEX. 



on, were based on sound princi- 
ples, 677 ; approved by all pro- 
ducers, 677 ; over periods of 
moderate length, interests of 
producers and consumers the 
same, 677 ; "cotton vrool," 684 

Woolens, manufacture of, returns 
to labor and capital in, 312; wool- 
en manufacturers of England 
seeking the suppression of those 
of Ireland, 491 ; in France, 503 ; 
trade in, between Germany and 
. England, 518-520 ; manufacture 
in Canada, 531 ; statutes to pro- 
tect in England 555 ; wages 
in, in England, and Massachu- 
setts, 580, 582 ; woolen blankets. 
Perry's error as to duties being 
a tax on consumer stated, 589 ; 
refuted, 590, 679; identity of 
prices in England and America, 
590 ; export of, 611 ; imports 
and revenue, 61 4 ; protection to 
woolen manufacture in Canada 
and effects of , 665,666; extraordi- 
nary prices of ancient woolens, 
669 ; manufacture of closely de- 
pendent on iron and steel, 677 

Wool-sack, why so called, 670 

Work, difficulties of beginning, 
238 ; at first despised, 234 ; at 
first an adjunct to hunting or 
war, 234 ; cost in work not 
identical with cost in money, 
573,574 ; work only exists 
where employers make profits, 
625 

Workmen (see Labor, Wages, 
Strikes); number of employed, a 
reason (Smith) for protection, 
556 ; wages reduced by cut- 
ting them off from the land, 



574; should be attracted to 
where their effort will win 
largest returns, 574 ; moral value 
of an extra dollar to, 583 ; re- 
duced by free trade, 635, 637 ; 
number of discharged and suf- 
fering, in 1816-19, in United 
States, 642 ; employed in Cana- 
dian • manufactures, 667, 668 ; 
decline of, in English silk manu- 
facture, 635, 637 ; decline of 
numbers in woolen, 673 ; in- 
crease of number in Europe, 
674 ; large proportion of work- 
ers in cotton in Manchester, 685;, 
in cotton manufacture, 689 

World, relative incomes of nations, 
36 ; products of iron, steel, and 
coal, 650 

Worsted, wages of work in Massa- 
chusetts and England, 582 ; 
wools for, 672 

Wrought iron, English and Ameri- 
can prices of, 590 

Wurtemburg, 515, 523, 524 

Y. 

Yarn, import and export of Qer- 

manv, 519,520 
Yen, 338 

Z. 

Zemstvo, 530 

Zinc, exports and imports of and 
revenue, 611, 614 

Zollverein,^inception and work of, 
514^521 ;' population of and 
movement of German states in- 
to, 515 ; what it could do for 
profits and wages, 517 




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